Piper Sandler maintains Overweight rating on OFG shares

Piper Sandler has affirmed its Overweight rating on OFG Bancorp (NYSE: NYSE:OFG), maintaining a price target of $47.00.

The firm's assessment followed OFG Bancorp's third-quarter earnings, which did not meet expectations.

Despite this, the financial services firm anticipates only a slight adjustment to its projections, citing a smaller net interest margin (NIM) being largely counterbalanced by an expanded balance sheet.

OFG Bancorp's management provided optimistic remarks about the Puerto Rican economy and expressed confidence in loan growth.

Although non-performing loan levels in the consumer segment rose unexpectedly, delinquency rates remained unchanged. Piper Sandler emphasized the continued economic support for the region, projecting that credit conditions should remain relatively stable moving forward.

In other recent news, OFG Bancorp reported a 5.3% year-over-year increase in earnings per share to $1.00 for the third quarter of 2024. The company's core revenues reached a commendable $174.1 million, and its total assets saw a growth of 12% to $11.5 billion.

The bank's new loan production reached $572 million, with 95% of retail transactions conducted digitally. The bank also acquired a servicing portfolio, which is expected to generate approximately $900,000 in quarterly mortgage banking fees.

In terms of future developments, OFG Bancorp anticipates two additional Federal Reserve rate cuts and continued loan growth, particularly in Puerto Rico and the U.S. The net interest margin for Q4 is projected between 5.3% and 5.4%, and non-interest expenses are expected to range from $91 million to $93 million.

InvestingPro Insights

To complement Piper Sandler's analysis, recent data from InvestingPro offers additional context on OFG Bancorp's financial performance and market position. The company's P/E ratio of 10.74 and adjusted P/E ratio of 9.8 for the last twelve months as of Q3 2024 suggest that the stock may be undervalued relative to its earnings, aligning with Piper Sandler's view that the current market valuation doesn't fully reflect the bank's potential.

OFG Bancorp's dividend profile is particularly noteworthy. An InvestingPro Tip highlights that the company has maintained dividend payments for 33 consecutive years, demonstrating a strong commitment to shareholder returns. This is further supported by a current dividend yield of 2.42% and a robust dividend growth rate of 13.64% over the last twelve months.

The bank's financial health is underscored by its profitability over the last twelve months and an operating income margin of 44.58%. These metrics reinforce Piper Sandler's positive outlook on the company's performance, despite the recent earnings miss.

For investors seeking a more comprehensive analysis, InvestingPro offers additional tips and insights. Currently, there are 8 additional InvestingPro Tips available for OFG Bancorp, providing a deeper dive into the company's financial health and market position.

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