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On Wednesday, Piper Sandler adjusted its price target on Nicolet Bankshares (NASDAQ:NCBS) (NYSE: NIC (NASDAQ:EGOV)) stock, increasing it slightly to $120 from $119 while maintaining a Neutral rating. The $1.63 billion market cap bank, currently trading at a P/E ratio of 14.2x, has demonstrated strong momentum with a 31% return over the past year. The firm's analyst, Nathan Rice, cited a robust fourth quarter performance to round off an impressive year in 2024. Nicolet Bankshares showcased a strong return on assets (ROA) and return on tangible common equity (ROTCE) at 1.55% and 17.5%, respectively. This performance was attributed to a 10% pre-provision net revenue (PPNR) beat, primarily due to an increase in net interest income (NII).
The company experienced mid-to-high single-digit annualized growth in both loans and core deposits. Additionally, Nicolet Bankshares demonstrated solid operating leverage and maintained top-tier credit metrics through the fourth quarter. According to InvestingPro data, the bank has achieved impressive revenue growth of 28.9% over the last twelve months, with an overall financial health rating of "GREAT." Piper Sandler believes that Nicolet Bankshares is an attractive long-term holding option, given its superior profitability profile and ability to drive organic growth, largely through market share gains and its holistic business model.
The analyst also noted the bank's capacity to utilize excess tangible common equity (TCE) flexibility for potential mergers and acquisitions, which could help the bank effectively manage crossing the $10 billion in assets threshold or increase capital returns to shareholders. InvestingPro analysis reveals additional insights about the bank's potential, with multiple ProTips highlighting its attractive valuation relative to growth prospects. Subscribers can access detailed financial metrics and exclusive analysis on the platform. Piper Sandler's positive outlook on the bank's strategic moves is reflected in the adjustment of the estimated earnings per share (EPS) for 2025 and 2026, raising them by 7% and 6% to $8.25 and $8.45, respectively.
The new price target of $120 is based on a 14.5 times multiple of the firm's 2025 earnings estimate, a slight reduction from the previous multiple due to lower peer multiples. However, the target still represents a premium compared to peer banks, which trade at an average of 10.7 times, underscoring Nicolet Bankshares' top-tier attributes as recognized by Piper Sandler. InvestingPro's Fair Value analysis suggests the stock is currently undervalued, supporting the premium valuation thesis.
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