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On Monday, Stephens analyst Matt Olney adjusted the price target for Texas Capital Bancshares (NASDAQ:TCBI) shares, bringing it down to $90 from the previous $95. Despite the reduction, the firm maintained an Overweight rating on the stock. According to InvestingPro data, the stock currently trades at $66.03, suggesting a potential 23% upside to the analyst target, though three analysts have recently revised their earnings expectations downward. Olney’s commentary focused on the first quarter of 2025, noting that Texas Capital’s net interest income (NII) was robust, with both deposit costs and loan yields surpassing expectations. However, pre-provision net revenue (PPNR) did not meet the consensus forecast, attributed to weaker fee income influenced by the macroeconomic conditions towards the end of the quarter. InvestingPro analysis reveals the bank maintains a Fair financial health score of 2.06, with particularly strong cash flow metrics despite recent challenges.
The company’s first-quarter performance has led to a relatively stable forecast from Stephens, as the improved outlook for NII is seen to balance out the slower fee income. Texas Capital has reaffirmed its goal of reaching a return on assets (ROA) of 1.10% in the second half of 2025. Additionally, the bank has revised its revenue guidance for 2025, now aiming for the higher end of the previously stated range. This update is noted as particularly positive given the current challenging economic climate.
Olney’s report also highlighted Texas Capital’s solid capital position and appealing valuation as reasons for reiterating the Overweight rating. The new price target of $90 is based on a 14-fold multiple applied to the projected earnings per share (EPS) of $6.46 for 2026, and 1.2 times the forecasted tangible book value per share (TBVPS) over the next 12 months. Current InvestingPro metrics show the stock trading at a P/E ratio of 38.04 and P/B ratio of 0.97, with comprehensive valuation analysis available in the Pro Research Report, part of the extensive coverage of 1,400+ US stocks on the platform.
In summary, while the fee income has been softer than anticipated, the strong net interest income and the bank’s financial targets for the latter half of the year appear to support the analyst’s positive outlook. Texas Capital has also signaled confidence in its revenue prospects for 2025, which has been well-received amidst the broader economic headwinds.
In other recent news, Texas Capital Bancshares Inc. reported its first-quarter 2025 earnings, which fell short of analysts’ expectations. The company announced an earnings per share (EPS) of $0.92, missing the forecasted $0.9518, and reported revenue of $280.48 million, below the anticipated $285.71 million. Despite these misses, the company showed a strong year-over-year performance, with revenue increasing by 9% and net income to common shareholders rising by 44% to $42.7 million. Texas Capital has been focusing on expanding its treasury solutions and launching a new wealth management platform, which contributed to its financial gains. The company has also raised its revenue guidance to low double-digit growth for the year, maintaining its non-interest expense guidance at high single-digit growth. Looking forward, Texas Capital aims for a return on average assets (ROAA) of 1.1% in the second half of the year. Additionally, the company has been recognized for its robust capital levels and strategic initiatives, which have fostered investor confidence despite the earnings shortfall. Analyst firm KBW noted that Texas Capital’s revenue guidance was influenced by improvements in net interest income and client acquisition trends.
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