Raymond James reiterates Strong Buy on Peapack-Gladstone Financial stock

Investing.com - Raymond James has reiterated its Strong Buy rating and $39.00 price target on Peapack-Gladstone Financial (NASDAQ:PGC), representing a 47% upside from the current price of $26.54, despite disappointing second-quarter results. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value assessment.

The investment firm noted that PGC faced challenges in the second quarter, including credit deterioration, increased expenses from additional investments, and weaker net interest income due to lower deposit balances. Despite these challenges, InvestingPro data shows the company maintains solid financial health metrics with a ’Fair’ overall rating and strong cash flow score of 2.17 out of 3.

According to Raymond James, PGC management indicated that core deposit growth trends have resumed, and net interest margin expansion should continue at approximately 10 basis points per quarter. Management also stated that expense growth would be under control with no additional large team lift-outs planned.

The firm remains optimistic about PGC’s loan growth prospects, which combined with continued deposit growth, suggests strong net interest income growth ahead. While non-performing assets remain elevated, one large commercial loan is expected to be resolved in the second half of 2025.

Raymond James maintained its Strong Buy rating based on expectations that earnings and franchise value will continue to improve due to the bank’s deposit initiatives, despite current challenges with problem loans in the portfolio. Notable strengths include a 28-year track record of consistent dividend payments and projected profitability for the current year, as highlighted by InvestingPro analysis.

In other recent news, Peapack-Gladstone Financial reported earnings that did not meet expectations, primarily due to increased expenses from its expansion in the New York City metropolitan area and higher provision expenses. Following this, Keefe, Bruyette & Woods adjusted their price target for Peapack-Gladstone to $35.00 from $38.00, while maintaining an Outperform rating. This adjustment comes in the wake of an 8.70% drop in the company’s shares after the earnings report.

Additionally, Peapack-Gladstone Financial has appointed A. Michael Smith as Senior Vice President and Chief Audit Executive. Smith, who brings over 30 years of experience in auditing and risk management, will lead the internal audit function and drive strategic initiatives for growth. His previous roles include Chief Audit Executive at Nasdaq and Partner at PwC, where he focused on internal audit transformation. Smith’s expertise is expected to support the bank’s continued development and innovation efforts.

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