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On Monday, Keefe, Bruyette & Woods analyst Damon DelMonte adjusted the price target for 1st Source Corporation stock to $69.00, an increase from the previous target of $67.00. The analyst sustained a Market Perform rating for the bank holding company.
DelMonte's decision followed 1st Source's recent financial performance, which showcased operating earnings of $1.46 per share. This figure surpassed expectations, attributed to a robust pre-provision net revenue (PPNR), a marginally lower provision for credit losses, and a reduced tax rate. The PPNR gain was partly due to a 14 basis points expansion in the net interest margin (NIM) and improved fee income, despite expenses exceeding initial projections. InvestingPro analysis reveals the company maintains a solid financial health score of "GOOD" and has demonstrated consistent shareholder returns, having raised its dividend for 32 consecutive years.
The company also reported significant loan growth, marking a 14% last quarter annualized (LQA) increase, with deposit growth not far behind at a strong 6% LQA. These numbers indicate a solid finish to the year in terms of asset and liability management. The company's revenue grew by 3.1% over the last twelve months, trading at a P/E ratio of 10.74.
In light of the positive NIM outlook, DelMonte revised his models for 1st Source, leading to an 11% increase in the estimated earnings for 2025 and a 9% increase for 2026. The recalibration of the model to accommodate a higher NIM run rate directly influenced the upgraded price target.
The Market Perform rating suggests that Keefe, Bruyette & Woods anticipates 1st Source Corporation stock to perform on par with the broader market in the near future. The new price target of $69.00 reflects the adjustments made after considering the company's recent financial outcomes and future earnings potential.
In other recent news, 1st Source Corporation has been the subject of multiple analyst adjustments following its strong earnings quarter. The company reported earnings of $1.41 per share, narrowly missing DA Davidson's estimate but surpassing the consensus. Preprovision net revenue also increased, reaching $48.49 million, which reflects effective expense management and consistent margin growth. Piper Sandler upgraded 1st Source shares from Neutral to Overweight and raised the price target to $72.50. The firm's analyst, Nathan Race, highlighted the company's superior operating leverage and profitability, expecting a 10% growth in pre-provision net revenue and a return on assets of 1.6%.
DA Davidson also adjusted its financial outlook on 1st Source, raising the price target to $64 from $62 while maintaining a Neutral rating. The firm's new price target reflects a target price-to-earnings ratio of 11.5 times DA Davidson's 2025 earnings per share estimate of $5.59. Piper Sandler's raised earnings per share estimates for 2025 and 2026 are set at $5.80 and $6.00, respectively, indicating higher expectations for net interest income and core fee income.
In other recent developments, 1st Source reported a 6.07% increase in net income for the third quarter, totaling $34.94 million. The company's diluted net income per common share also rose by 6.82% to $1.41. The Board of Directors approved a quarterly cash dividend of $0.36 per common share, marking a 12.50% increase from the previous year. The company's capital position remains robust, with a common equity-to-assets ratio of 12.60% as of September 30. Despite a slight decrease in average deposits compared to the previous quarter, the company witnessed a 2.65% year-over-year increase.
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