Street Calls of the Week
Keefe, Bruyette & Woods (KBW) has adjusted their price target on Customers Bancorp (NYSE:CUBI), lifting it to $76 from the previous $65, while keeping an Outperform rating on the stock.
The revision follows Customers Bancorp's recent performance report, which indicated significant loan growth and margin expansion, along with capital levels exceeding targets.
A KBW analyst noted that customers Bancorp has shown impressive loan growth, which increased by 11% on a last quarter annualized basis, and a margin expansion of 20 basis points. Additionally, the company's capital has exceeded the targeted levels with tangible common equity (TCE) greater than 7.5% and a common equity tier 1 (CET1) ratio surpassing 11.5%.
The analyst also noted positive developments in Customers Bancorp's deposit mix and the early success of new teams from Signature Bank New York (OTC:SBNY), which are already gaining traction. KBW highlighted that few banks possess the core growth potential and earnings capabilities that Customers Bancorp has, which could support robust earnings growth and high profitability in the future.
KBW forecasts a 20% increase in earnings per share (EPS) and a return on tangible common equity (ROTCE) of 14.5% by the year 2025 for Customers Bancorp. Despite these strong projections, the stock is currently trading at 1.3 times tangible book value and 8.9 times KBW's estimated earnings for 2025, which is considered inexpensive relative to its peers.
To be sure, Customers Bancorp reported strong second-quarter results for the fiscal year 2024, with the bank experiencing an 11% annualized growth in loans and expanding its net interest margin by 19 basis points.
The firm's tangible book value per share increased notably, surpassing $50 with a 13% annual growth in the first half of the year.
InvestingPro Insights
Recent data from InvestingPro provides a deeper dive into Customers Bancorp's financial metrics and stock performance, complementing the analysis by Keefe, Bruyette & Woods. The company's market capitalization stands at $2.07 billion, and it trades at an attractive P/E ratio of 8.5, which is particularly compelling when paired with its revenue growth of 26.6% over the last twelve months as of Q2 2024. This combination of a low P/E ratio and strong revenue growth suggests that Customers Bancorp may be undervalued relative to its earnings potential.
InvestingPro Tips indicate that while the stock has delivered a significant return over the last week at 7.63%, and an impressive 59.97% over the past year, analysts caution that the stock is currently in overbought territory based on the Relative Strength Index (RSI). Additionally, despite the strong returns, Customers Bancorp does not pay a dividend to shareholders, which may influence the investment strategy of income-focused investors.
For those considering a deeper analysis, InvestingPro offers additional insights into Customers Bancorp's financial health and stock performance. With these metrics in mind, potential investors can make more informed decisions. To access these valuable tips and more, visit https://www.investing.com/pro/CUBI and use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription. There are 15 additional InvestingPro Tips available, offering a comprehensive look at the company's prospects.
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