On Wednesday, Keefe, Bruyette & Woods (KBW) adjusted its price target for Cadence Bancorp (NYSE: CADE) stock, increasing it to $33.00 from the previous $32.00, while sustaining its Outperform rating.
The firm cited the bank's recent quarterly performance as the catalyst for this change, highlighting a significant beat on both earnings per share (EPS) and pre-provision net revenue (PPNR).
The firm acknowledged the quarter as a pivotal moment, with Cadence Bancorp's better-than-expected revenue guidance and stable expenses laying the groundwork for near-term profitability enhancements.
The analysts pointed out that although the stock's upside potential might be somewhat factored in at its current valuation, which is 10.3 times the projected 2025 earnings and 1.5 times the tangible book value (TBV), Cadence Bancorp's prospects for profitability improvement in 2024 justifies a higher valuation.
KBW's outlook remains positive, despite leaving estimates unchanged after the quarterly results. The firm sees potential for additional gains stemming from a more favorable non-interest bearing deposit (NIBD) mix than anticipated, persistently stable interest rates, robust loan growth, and the possibility of stock buybacks. The Outperform rating is a reflection of this optimism, with the firm expecting Cadence Bancorp to outperform the market or its sector peers.
Cadence Bancorp's recent performance and the revised price target from KBW suggest a confidence in the bank's strategy and its ability to deliver shareholder value in the near term. The adjustment in the price target to $33.00 underscores the firm's belief in the bank's growth trajectory and potential for profitability ahead of the broader industry's expectations for 2025.
InvestingPro Insights
Following Keefe, Bruyette & Woods' optimistic assessment of Cadence Bancorp, real-time data from InvestingPro supports a promising outlook for the company. With a market cap of $5.26 billion and revenue for the last twelve months as of Q1 2024 standing at $1.19 billion, Cadence demonstrates substantial size and income. Despite a revenue decrease of 34.34% in the same period, the company's dividend yield of 3.46% and a dividend growth of 6.38% indicate a shareholder-friendly policy, aligning with the InvestingPro Tip that Cadence has raised its dividend for 11 consecutive years.
InvestingPro Tips further reveal that Cadence is expected to see net income growth this year, and the stock has experienced a significant return over the last week, with a 1-week price total return of 8.53%. This complements KBW's positive stance, suggesting that the company's stock may continue to appeal to investors seeking growth as well as income. Additionally, Cadence Bancorp's strong performance over the last six months, with a 6-month price total return of 41.83%, reinforces the potential for profitability highlighted by analysts.
For those interested in deeper analytics and more InvestingPro Tips, including insights into Cadence Bancorp's trading multiples and profitability margins, visit https://www.investing.com/pro/CADE. There are additional tips available, offering a comprehensive understanding of the company's financial health. To enhance your investing strategy, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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