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On Thursday, Piper Sandler increased the price target for Unity Bancorp (NASDAQ:UNTY) shares to $54, up from the previous $53, while maintaining an Overweight rating. The firm's analysts have stated that Unity Bancorp's shares remain very attractive following a robust fourth-quarter performance.
Unity Bancorp reported fourth-quarter 2024 earnings per share (EPS) of $1.13, which, after adjustments for a one-time valuation-related SERP adjustment and a normalized tax rate, the core EPS stands at $1.14. These figures surpassed both Piper Sandler's estimate of $1.09 and the consensus of $1.06. According to InvestingPro data, three analysts have recently revised their earnings estimates upward for the upcoming period, suggesting growing confidence in the company's outlook.
Unity Bancorp concluded the year with a strong quarter, showcasing positive underlying trends. Notably, the company experienced a net interest margin (NIM) expansion of 21 basis points, reaching 4.37%. This expansion contributed to a $0.04 net interest income (NII) beat against the firm's modeling.
Moreover, Unity Bancorp reported approximately 2% loan growth on a linked-quarter basis, which was entirely funded by deposit growth, including continued non-interest bearing (NIB) inflows. The company's financial strength is reflected in its "GOOD" overall health score on InvestingPro, with particularly strong metrics in profitability and price momentum.
Throughout 2024, Unity Bancorp's quarterly profitability improved, culminating in a high note with a core return on assets (ROA) exceeding 1.8%. This strong financial performance contributed to Unity Bancorp's share price increasing by 5% on Thursday, which notably outperformed the NASDAQ Bank Index that rose by 2% on the same day.
The positive momentum in Unity Bancorp's stock is attributed to the company's solid financial results, which have demonstrated consistent growth and profitability. The raised price target reflects the firm's confidence in Unity Bancorp's continued performance and market position as the banking sector moves through 2025.
In other recent news, Unity Bancorp's strong fourth-quarter earnings have caught the attention of analysts at Keefe, Bruyette & Woods (KBW). The company's earnings exceeded expectations by $0.10 per share, largely due to a significant 22 basis points beat on net interest margin (NIM). This outperformance contributed to a 36 basis points margin expansion in the second half of 2024, a trend anticipated to continue into 2025.
As a result of the improved net interest income (NII) outlook, KBW analysts have raised their pre-provision net revenue (PPNR) estimates for Unity Bancorp by 6% for 2025 and 3% for 2026. In contrast, their earnings per share (EPS) projections have been slightly lowered, as near-term buybacks have been removed from their model.
Unity Bancorp is projected to maintain strong profitability, with a return on assets (ROA) between 1.8% and 1.9% and a return on tangible common equity (ROTCE) around 16%. These figures are expected to remain stable regardless of the interest rate environment.
KBW has maintained a positive stance on Unity Bancorp, raising its price target from $51.00 to $55.00, while reiterating an Outperform rating. These recent developments highlight the ongoing financial strength and positive outlook for Unity Bancorp.
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