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Investing.com - The Bancorp (NASDAQ:TBBK) stock rose Tuesday after Keefe, Bruyette & Woods maintained its Market Perform rating and $65.00 price target on the company.
KBW highlighted The Bancorp’s increased share repurchase authorization, which amounts to $500 million through 2026, representing approximately 18% of the company’s $2.78 billion market capitalization and 120% of KBW’s projected earnings over that period. This aligns with one of the key InvestingPro observations that management has been aggressively buying back shares.
The firm estimates these buybacks will have a $0.43 or 6.6% positive impact on 2026 earnings per share, even after accounting for the expected senior debt issuance that will partially fund the repurchases.
KBW noted it was not surprised by the announcement, as management had previously indicated The Bancorp might replace and potentially upsize its debt note to fund additional buybacks.
With a tangible common equity ratio of 8.8%, strong internal capital generation with return on tangible common equity near 30%, and limited need for balance sheet growth as it approaches the $10 billion threshold, KBW views The Bancorp’s ability to return most earnings to shareholders as a "unique differentiating characteristic" for small and mid-cap bank investors. The company maintains a GREAT financial health score according to InvestingPro, which offers 10+ additional insights and a comprehensive Pro Research Report for deeper analysis of TBBK’s financial position.
In other recent news, The Bancorp has announced an increase in its share repurchase program, with a total authorization of $500 million through 2026. This plan will be funded with available cash and refinancing $100 million of maturing senior unsecured debt with $200 million in new debt, pending regulatory approval. Additionally, The Bancorp’s proposed sale of its largest OREO property, the Aubrey apartment complex, has fallen through after the purchaser missed multiple deadlines, leading to the forfeiture of $3 million in earnest money deposits. Analysts from Raymond (NSE:RYMD) James and Keefe, Bruyette & Woods have reiterated an Outperform rating on The Bancorp, citing the company’s strong position in the Banking-as-a-Service sector and potential growth despite near-term challenges. Piper Sandler also reaffirmed an Overweight rating with a $68 price target, highlighting the bank’s strategic initiatives and commitment to shareholder value through aggressive share buybacks. The Bancorp’s recent earnings results have shown some volatility, attributed to rate cuts impacting the net interest margin. However, analysts remain optimistic about the bank’s long-term growth prospects. These developments reflect the evolving landscape surrounding The Bancorp’s operations and financial performance.
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