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Investing.com - Piper Sandler raised its price target on Old Second Bancorp (NASDAQ:OSBC) to $24.50 from $22.00 on Wednesday, while maintaining an Overweight rating on the stock. Currently trading at $18.79, OSBC is near its 52-week high of $19.46, with InvestingPro data showing 4 analysts recently revising their earnings estimates upward.
The price target increase follows the recent closing of Old Second Bancorp’s acquisition of Bancorp Financial, Inc., the holding company for Evergreen Bank Group (EBG). The acquisition was initially announced on February 25.
Piper Sandler believes the EBG acquisition enhances Old Second Bancorp’s growth prospects through EBG’s powersport lending niche, while also reducing the bank’s asset sensitivity and supporting a more durable net interest margin.
The research firm has increased its 2025 and 2026 operating EPS estimates to $1.96 and $2.15, respectively, up from previous estimates of $1.90 and $1.95. Piper Sandler notes its outlook for next year is conservatively below management’s guidance for 16% accretion.
The new price target is based on 11.5 times Piper Sandler’s 2026 EPS estimate, representing a premium to peers’ 10.0x multiple, which the firm attributes to Old Second Bancorp’s superior profitability outlook with an expected ROA of 1.5%-1.6% in 2025/2026.
In other recent news, Old Second Bancorp Inc. reported higher-than-expected earnings for the first quarter of 2025, with earnings per share (EPS) of $0.45, surpassing the forecast of $0.44. The company’s revenue also exceeded expectations, reaching $73.1 million compared to the anticipated $70.96 million. In a strategic move, Old Second Bancorp has doubled its authorized common shares from 60 million to 120 million, as approved by shareholders. This increase provides the company with flexibility for future capital endeavors, though no immediate plans to issue the new shares have been announced.
Additionally, Old Second Bancorp’s shareholders approved several proposals during the Annual Meeting, including an amendment to the 2019 Equity Incentive Plan and the ratification of Plante & Moran, PLLC as the independent registered public accounting firm. In analyst updates, Stephens research firm adjusted its price target for Old Second Bancorp, lowering it to $20.00 from $22.00, while maintaining an Overweight rating on the stock. The firm noted the bank’s improved net interest margin and positive deposit flows, which position it favorably for an upcoming merger with Evergreen Bank.
The bank’s credit quality has shown significant improvement, with a 62% decline in criticized loans since their peak in early 2023. These developments reflect Old Second Bancorp’s effective cost management and strategic initiatives, providing investors with insights into the company’s financial health and future prospects.
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