Street Calls of the Week
Investing.com - Keefe, Bruyette & Woods (KBW) has reiterated an Outperform rating and $90.00 price target on Prosperity Bancshares (NYSE:PB) following the bank’s recent acquisition announcement.
Prosperity Bancshares recently announced the acquisition of San Antonio-based Southwest Bancshares in an all-stock deal valued at $269 million. This transaction builds upon the bank’s acquisition of ABHC completed in July 2025, adding $2.4 billion of incremental assets across Central Texas. The $6.18 billion market cap bank maintains a conservative profile with a beta of 0.74, indicating lower volatility than the broader market. InvestingPro analysis shows the stock is currently trading near its Fair Value.
KBW notes the deal is more focused on scale and density rather than significant earnings impact, with an expected 2.5% EPS accretion. The firm views these smaller acquisitions favorably as they help support downside risk to slower growth without introducing significant risk.
Including the Southwest acquisition and KBW’s updated economic baseline that anticipates earlier interest rate cuts, the firm has adjusted its earnings estimates for Prosperity Bancshares to $5.70 for 2025 and $6.48 for 2026, while introducing a fully-phased 2027 estimate of $7.00.
Prosperity Bancshares is currently trading at approximately 1.5 times tangible book value and a P/E ratio of 11.87, with the bank scheduled to report third-quarter earnings on Wednesday, October 29. The stock’s attractive valuation metrics and strong dividend history are among several positive indicators identified in the comprehensive Pro Research Report available on InvestingPro.
In other recent news, Prosperity Bancshares reported its second-quarter 2025 earnings with a slight surprise, posting an earnings per share (EPS) of $1.42, which exceeded the forecast of $1.41. However, the company’s revenue did not meet expectations, coming in at $310.7 million compared to the anticipated $314.98 million. In terms of acquisitions, Prosperity Bancshares announced it will acquire Southwest Bancshares in San Antonio for $269 million. This follows the earlier acquisition of American Bank Holding Corp., which has strengthened its presence in the San Antonio area.
Analysts have been updating their evaluations in light of these developments. DA Davidson maintained a Neutral rating with a price target of $75.00, reflecting the recent acquisition announcement. RBC Capital reiterated a Sector Perform rating with a $78.00 price target, noting the acquisition as a solid move. Meanwhile, Jefferies adjusted its price target to $85.00 from $90.00, citing slower loan growth while maintaining a Buy rating. These updates provide investors with a range of perspectives on Prosperity Bancshares’ recent activities.
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