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Wednesday, Piper Sandler reiterated its Overweight rating on First Busey Corporation (NASDAQ:BUSE) with a steady price target of $26.00. The firm’s analyst highlighted the company’s attractive valuation following the closure of a $215 million preferred offering on Tuesday. First Busey’s offering, with an 8.25% dividend rate, is set to begin payouts on September 1. With a market capitalization of $2.01 billion and a current dividend yield of 4.44%, First Busey has maintained dividend payments for 37 consecutive years, according to InvestingPro data.
The proceeds from this offering are earmarked for the redemption of $125 million worth of 5.25% fixed-to-floating rate subordinated debt, scheduled for June 1. This strategic financial move is anticipated to bolster First Busey’s general corporate purposes. Piper Sandler noted that the offering would add to the bank’s Tier 1 capital, projecting an increase in the pro forma Total (EPA:TTEF) Risk-Based Capital (TRBC) ratio to approximately 15.4% from 14.9% as of March 31. Additionally, the leverage ratio is expected to climb to around 14.3% from 13.0%, while the Tangible Common Equity (TCE) ratio is forecasted to decrease slightly by about 3 basis points to 8.80%, taking into account the redemption of the subordinated debt. InvestingPro analysis indicates the stock is trading at a relatively high P/E ratio of 23.6x, with the platform’s Fair Value model suggesting the stock may be overvalued at current levels.
In light of these developments, Piper Sandler has adjusted its earnings per share (EPS) estimates for First Busey. The firm has reduced its 2025 and 2026 EPS projections by $0.04 and $0.10, respectively, now anticipating $2.56 and $2.75. Despite these adjustments, the price target remains unchanged at $26.00, which now reflects a slightly higher earnings multiple of 10.2 times the 2025 EPS estimate, compared to the previous 10.0 times. This adjustment is attributed to higher peer multiples observed by the analyst. Trading at $22.50, the stock sits between its 52-week range of $18.40 to $28.97, with InvestingPro showing an overall Financial Health Score of FAIR based on comprehensive analysis of growth, profitability, and momentum metrics.
In other recent news, First Busey Corporation has announced the pricing of its public offering of 8 million depositary shares, each representing a 1/40th interest in a share of its Series B preferred stock. This offering, expected to close in May 2025, aims to raise funds for general corporate purposes and to redeem Busey’s 5.25% Subordinated Notes due 2030. Additionally, First Busey declared a quarterly cash dividend of $0.25 per common share, with payments scheduled for late April 2025. The company has also undergone significant executive changes, with the departure of Jeffrey D. Jones as Executive Vice President and Chief Financial Officer. Scott A. Phillips has been appointed as the Interim CFO, bringing over 20 years of experience to the role. Meanwhile, DA Davidson has maintained a Neutral stock rating for First Busey, with a price target set at $25.00, following these developments. The analyst firm noted that the CFO’s exit was unrelated to the impending acquisition of Cummins (NYSE:CMI) Facility Services. Investors will be closely monitoring First Busey’s executive search and the integration of the Cummins acquisition.
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