Simmons First National stock target cut to $25 at Stephens

On Monday, Stephens analysts adjusted their outlook on Simmons First National (NASDAQ: SFNC), reducing the price target to $25 from the previous $27, while maintaining an Overweight rating on the shares. Currently trading at $17.39, with a P/E ratio of 15.6x and price-to-book of 0.62x, InvestingPro analysis suggests the stock is currently undervalued. This revision follows the company’s first-quarter financial results for 2025, which saw earnings per share (EPS) fall short of the consensus forecast due to higher-than-expected loan loss provision (LLP) expenses. However, pre-provision net revenue (PPNR) exceeded expectations, bolstered by better-than-anticipated loan yields and deposit costs.

Despite the lower EPS, Stephens analysts have kept their FY2025 guidance unchanged, expressing confidence in the management’s conservative estimates concerning net interest income (NII), potential loan growth, and operating expenses. The company’s strong dividend track record, having maintained payments for 52 consecutive years with 13 years of consecutive increases and currently offering a 4.89% yield, demonstrates financial stability. The analysts anticipate that the stock might face short-term challenges but expect sentiment to improve in the second half of 2025 as credit conditions stabilize and management’s guidance potentially becomes more favorable.

The report suggests that Simmons First National is at the beginning of a multi-year period of double-digit PPNR growth. While not included in their current forecast, analysts believe that a more favorable financial environment could enable the bank to accelerate its profitability through balance sheet restructuring. The new price target of $25 is based on 14 times the projected 2026 EPS and 1.4 times the forecasted tangible book value per share (TBVPS) over the next 12 months.

Stephens analysts remain optimistic about the bank’s prospects, indicating that the Overweight rating reflects their positive view on the stock’s potential performance. The unchanged FY2025 guidance, despite the first-quarter setback, underscores their belief in the bank’s ability to navigate through the current challenges and capitalize on growth opportunities in the near future.

In other recent news, Simmons First National Corporation reported its first-quarter 2025 earnings, revealing a shortfall in earnings per share (EPS) expectations. The company posted an EPS of $0.26, which was below the forecasted $0.358, while revenue slightly exceeded expectations at $209.58 million compared to the anticipated $209.14 million. DA Davidson analysts responded by adjusting the price target for Simmons First National stock from $23.00 to $19.00, while maintaining a Neutral rating. The downgrade was primarily due to a larger-than-expected provision for credit losses related to two commercial loans. Despite these challenges, Simmons First National’s pre-provision net revenue per share exceeded expectations, supported by a robust loan pipeline and a steady outlook for net interest income growth. Analysts at DA Davidson project the bank’s net interest income to increase by 5% to 7% over the year. The company also reported a 6% increase in non-interest income quarter-over-quarter. Simmons First National continues to focus on deposit optimization, with a noted increase in consumer checking accounts by 1.5% year-over-year.

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