Fed’s Powell opens door to potential rate cuts at Jackson Hole
Investing.com - Piper Sandler has reiterated an Overweight rating on Merchants Bancorp (NASDAQ:MBIN) with a price target of $41.00. The $1.5 billion market cap bank currently trades at $32.55, with InvestingPro data showing a modest P/E ratio of 7.1x.
The research firm believes Merchants Bancorp has contained asset quality issues related to fraud-impacted loans and expects credit costs to decrease starting in the second half of 2025. According to InvestingPro analysis, the bank maintains a Fair Financial Health score, despite recent challenges.
While the magnitude of decline in loan loss provisions and net charge-offs for the third quarter of 2025 remains difficult to predict, Piper Sandler anticipates credit concerns will largely dissipate by next year.
The firm projects Merchants Bancorp’s business mix will continue generating pre-provision net revenue return on assets exceeding 1.9%, with tangible book value growth trending above average.
Piper Sandler views the current discounted price-to-tangible book value ratio of 0.91x as a likely floor for the stock and notes recent insider buying as a positive signal.
In other recent news, Merchants Bancorp reported second-quarter earnings that fell significantly short of analyst expectations. The company posted earnings per share of $0.60, missing the projected $1.12, while revenue was $179.2 million, surpassing the consensus estimate of $161.1 million. Net income for the quarter was $38 million, marking a 50% decrease from the $76.4 million reported in the same quarter last year. This decline was attributed to increased provisions for credit losses related to multi-family property values and mortgage fraud investigations.
The earnings report prompted analyst firms to adjust their projections for Merchants Bancorp. Piper Sandler lowered its price target for the company to $41.00, citing elevated loan loss provisions and net charge-offs. Similarly, Raymond (NSE:RYMD) James reduced its price target to $40.00, maintaining an Outperform rating, due to the company’s earnings per share falling short of expectations. Both firms highlighted concerns over the elevated loan loss provisions and net charge-offs in their assessments.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.