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On Tuesday, Keefe, Bruyette & Woods (KBW) adjusted their outlook on TriCo Bancshares (NASDAQ:TCBK), reducing the price target from $53.00 to $50.00 while maintaining a Market Perform rating. The adjustment follows a robust performance by the company at the end of 2024, which saw TriCo Bancshares shares climb by 4%. This increase was notably higher than the market average, with a 300 basis points relative outperformance.
The financial institution reported an expansion in the net interest margin (NIM) by 5 basis points, surpassing KBW's initial projection of a 4 basis points contraction. The strong end-of-year results were also characterized by solid loan growth, controlled expenses, and stable credit conditions. InvestingPro analysis reveals the company has maintained dividend payments for 32 consecutive years and raised them for 12 straight years, demonstrating consistent financial stability. Subscribers can access over 10 additional ProTips about TCBK's performance. Analysts highlighted the company's advantageous position for future growth, citing benefits from market disruptions and newly acquired talent in 2024.
KBW analysts have slightly increased their earnings estimate for 2025 by 1%, anticipating an improved net interest income (NII) outlook. Despite this, the estimate for 2025 earnings has been revised downward by 3% following the quarterly report, mainly due to expectations of higher operating costs as the company ramps up activities. Consequently, the price target has been adjusted to $50, aligning more closely with the consensus.
The firm expressed confidence in TriCo Bancshares' prospects for organic growth and potential acquisitions. While maintaining the Market Perform rating, analysts noted that the company's stock is trading at a level comparable to peers with similar profitability. InvestingPro's Fair Value analysis suggests the stock is currently undervalued, with a "GOOD" overall financial health score, supporting the positive outlook for the company's future performance. They also mentioned that mergers and acquisitions could provide further upside that is not yet factored into their model. Even in the absence of an acquisition, KBW anticipates that positive operating leverage could become apparent later in the year.
In other recent news, TriCo Bancshares has been the focus of various analyst adjustments. DA Davidson downgraded the stock from Buy to Neutral, despite increasing the price target to $53.00 from $50.00, citing potential concerns over the bank's involvement in mergers and acquisitions. Meanwhile, Stephens retained an Overweight rating on TriCo Bancshares, reducing the price target to $50.00 from $52.00, following the company's surpassing of third-quarter operational earnings per share expectations.
Piper Sandler also maintained an Overweight rating but lowered its price target for TriCo Bancshares from $53.00 to $50.00. This adjustment was due to revised earnings per share estimates for 2024 and 2025, attributed to an anticipated decrease in net interest income. Despite this, TriCo Bancshares continues to maintain a premium valuation relative to its peers, owing to its conservative credit practices and strong capital position.
In terms of future expectations, Stephens expressed optimism for the bank's growth, particularly in 2025, and suggested potential mergers and acquisitions activity within the next 6 to 12 months. These recent developments provide investors with a clearer picture of TriCo Bancshares' performance and potential prospects.
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