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On Thursday, Stephens analyst Matt Olney adjusted the price target for Southside Bancshares (NASDAQ: NYSE:SBSI) stock, reducing it to $37.00 from the previous $38.00. The firm maintained an Equal Weight rating on the shares. Currently trading at $31.43, the stock sits between its 52-week range of $25.30 to $38.00. The revision followed Southside Bancshares’ fourth-quarter 2024 financial results, which were a mixed bag of robust fee income and positive credit trends, tempered by challenges in net interest income (NII). According to InvestingPro, the bank’s market capitalization stands at $952.59 million, with a P/E ratio of 11.23x.
The company’s net interest margin (NIM) fell short of market expectations, contracting by 12 basis points compared to the consensus estimate of a 5 basis point contraction. Despite this underperformance, Stephens anticipates that the NIM will stabilize and potentially improve in 2025. This outlook is based on the easing of deposit cost pressures following the recent restructuring of the bank’s investment securities. Notably, InvestingPro data reveals that Southside Bancshares has maintained dividend payments for 27 consecutive years, currently offering a 4.58% yield, which could provide income stability for investors during this transition period.
The loan growth forecast for Southside Bancshares remains moderate, with expectations set for mid-single-digit (MSD) expansion in 2025. The lowered price target of $37 is founded on a 12.5 times multiple applied to the projected 2026 earnings per share (EPS) of $2.95 and a 1.68 times multiple on the twelve-month forecast for tangible book value per share (TBVPS).
In his commentary, Olney highlighted the bank’s financial performance, noting the balance of strengths and challenges faced in the last quarter of 2024. The Equal Weight rating suggests that the analyst sees the stock as fairly valued at its current price, indicating a neutral stance on the investment prospects of Southside Bancshares at this time.
In other recent news, Southside Bancshares Inc. reported a slight miss in both earnings per share (EPS) and revenue for the fourth quarter of 2024. The company’s EPS was $0.71, falling short of the projected $0.72, and the revenue was $66 million, missing the forecast of $68.16 million. Despite this, Southside Bancshares showed positive growth in full-year net income and EPS, with a 2.1% increase in full-year net income to $88.5 million and a 3.2% rise in diluted EPS to $2.91 compared to 2023.
Looking forward, the company is budgeting for mid-single-digit loan growth and expects a 16% revenue increase in its wealth management segment. The company’s CEO, Lee Gibson, expressed optimism for 2025 and highlighted anticipated growth in commercial and industrial lending. Southside Bancshares also faces potential challenges from rising non-interest expenses and an increased efficiency ratio.
These developments are part of the company’s recent strategic focus on expanding its commercial and industrial loan portfolio and leveraging the growth potential in the Texas economy. However, market uncertainty due to anticipated Federal Reserve rate cuts could impact financial performance.
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