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On Wednesday, Raymond (NSE:RYMD) James made adjustments to its stance on Origin Bancorp (NYSE:OBK), downgrading the stock from Strong Buy to Outperform with a revised price target (PT) of $39, a decrease from the previous $44. The firm’s analyst cited the bank’s year-to-date (YTD) outperformance and potential challenges ahead as reasons for the change. According to InvestingPro data, four analysts have recently revised their earnings expectations upward for the upcoming period, with analyst targets ranging from $42 to $45.
Origin Bancorp’s shares have risen by 3.81% YTD, contrasting with a 6.2% decline in the banking sector. Despite this strong performance, Raymond James foresees difficulties for Origin Bancorp in achieving its return on assets (ROA) target of 1.2-1.3% by 2027, particularly given its current ROA of 0.79%. The firm points to the potential for industry-wide muted loan growth as a significant hurdle. InvestingPro’s Fair Value analysis suggests the stock is currently fairly valued, with a ’FAIR’ overall financial health rating.
The analyst also noted that while the Optimize Origin strategy is viewed favorably, achieving the necessary scale for continuous progress toward their targets might be more challenging in the near term. Consequently, the current valuation, with a price-to-book ratio of 0.94x and a 1.74% dividend yield, is considered to more accurately reflect the bank’s profitability profile when compared to peers.
Even though Origin Bancorp is expected to maintain loan growth above its peers, driven by its expansion in the Florida Panhandle and South Alabama, the analyst believes that the timeline for reaching its long-term goals is likely to be extended due to the current market and economic dynamics.
In summary, while Raymond James acknowledges the potential for Origin Bancorp to outperform its peers and benefit from strategic expansions and new hires, the firm anticipates a less favorable risk-reward balance for the stock in the immediate future.
In other recent news, Origin Materials reported better-than-expected fourth-quarter results, with revenue reaching $9.2 million, slightly surpassing analyst estimates of $9.08 million. The company’s adjusted earnings per share were -$0.09, beating the consensus forecast of -$0.11. Despite the positive earnings surprise, Origin Materials experienced a net loss of $13.5 million for the quarter, compared to a $10.4 million loss in the same period last year. The company highlighted 2024 as a "transformational" year, with the introduction of the "first fully recyclable 100% PET cap" and the start of commercial production on its first PET cap manufacturing line. Origin Materials plans to have eight CapFormer lines online by the end of 2025 and projects full-year 2026 revenue between $110 million and $140 million. The company also anticipates achieving EBITDA positive results on a run-rate basis by the end of 2026. Ending the quarter with $102.9 million in cash, cash equivalents, and marketable securities, Origin Materials is arranging debt financing to support its capital equipment build-out. The company does not expect to raise equity capital to finance its growth.
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