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On Monday, Raymond (NSE:RYMD) James analyst Daniel Tamayo adjusted the price target for First Business Financial (NASDAQ:FBIZ) shares, reducing it to $59.00 from the previous $62.00, while retaining an Outperform rating on the stock. The mid-cap financial services company, currently valued at $398 million, trades at an attractive P/E ratio of 8.7x. According to InvestingPro analysis, the stock has delivered strong returns over the past five years.
In his statement, Tamayo noted the company’s release of its first-quarter financial results, which demonstrated continued solid fundamentals. The core net interest margin (NIM) remained stable, and although loan growth was steady, it was surpassed by strong core deposit growth, showing little sign of slowing momentum. InvestingPro data reveals the company achieved 9.4% revenue growth and maintains a healthy 15% return on equity. Get access to detailed financial analysis and 6 additional ProTips with an InvestingPro subscription.
Despite these positive aspects, the company faced challenges during the quarter. Tamayo pointed out that workouts in the equipment finance portfolio led to higher credit costs, and fee revenues did not meet expectations. However, he affirmed that First Business Financial’s growth and profitability forecasts remain above those of its peers.
The analyst emphasized that given the company’s solid profitability and credit quality, along with robust earnings growth, the stock warrants a price-to-tangible book value (P/TBV) premium compared to its peers.
Tamayo’s assessment reflects a balance of strong fundamental performance and some areas of concern within First Business Financial’s recent financial outcomes. The revised price target and sustained Outperform rating suggest a continued positive outlook for the company’s stock, despite the adjustments made following the latest earnings report.
In other recent news, First Business Financial Services reported its first-quarter 2025 earnings, surpassing expectations with an earnings per share (EPS) of $1.32, compared to the projected $1.25. The company’s revenue also exceeded forecasts, coming in at $40.8 million against the anticipated $39.53 million. Despite these positive financial results, the company experienced a 5.9% decline in after-hours trading, closing at $49.93, which may reflect broader market concerns. First Business saw significant growth in its SBA (LON:SBA) and asset-based lending sectors, contributing to a 23% year-over-year increase in pre-tax pre-provision adjusted earnings. The company is targeting a 10% annual revenue growth, with expectations to maintain a stable net interest margin between 3.60% and 3.65%. Analysts from Raymond James and KBW inquired about the stability of loan yields and potential impacts of trade policy changes, to which executives expressed confidence in their credit portfolio and minimal economic impact. First Business remains optimistic about its 2025 outlook, despite potential economic uncertainties and trade policy changes.
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