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On Monday, Stephens raised the stock price target for Seacoast Banking Corporation (NASDAQ:SBCF) to $26, up from $25, while maintaining an Equal Weight rating on the stock. This adjustment follows the company's reported earnings per share (EPS) of $0.36, which surpassed the expectations of both the Street and Stephens by $0.01.
The core pre-provision net revenue (PPNR) also exceeded projections, coming in at $45.6 million against the anticipated $45.0 million from Consensus and $44.3 million from Stephens.
The earnings report highlighted several key financial metrics. Net interest income (NII) was slightly below expectations by less than $0.01, whereas core fees exceeded predictions by $0.02. However, expenses were over by $0.01.
The net interest margin (NIM) showed a modest quarter-over-quarter decrease of 1 basis point to 3.17%, while the core NIM improved by 3 basis points to 2.90%. Guidance suggests a further increase in core NIM by 5 to 10 basis points in the following quarter.
In terms of growth, Seacoast Banking's loan growth was 6.6% on a last quarter annualized basis, which is higher than the 5.0% expected by Stephens. The end of period (EOP) loan balances also surpassed Consensus estimates, with the loan pipeline remaining consistent quarter over quarter. Expectations are set for mid-single digit loan growth in the upcoming quarters.
Stephens anticipates that the continued expansion of the NIM, along with gradually increasing loan growth, will position Seacoast Banking to approach its 1% return on assets (ROA) target by the fourth quarter of 2025.
Despite this positive outlook, the firm notes that Seacoast Banking currently trades at a premium based on price to tangible book value (P/TBV), which is not fully supported by the return on tangible common equity (ROTCE). Moreover, when compared to peers, the bank's valuation on PPNR and price to earnings (P/E) is in line, even with ROAs that are below peer levels.
In other recent news, Seacoast Banking Corporation reported positive developments in its third quarter of 2024. The corporation saw a 7% annualized increase in both loans and customer deposits, and a significant rise in net income to $30.7 million. The tangible book value per share also increased by 20% annualized to $16.20. The net interest margin expanded to 2.90%, with further growth expected in the fourth quarter.
Moreover, the corporation anticipates mid-single-digit loan growth in the fourth quarter and projects net interest income and non-interest income between $22 million and $23 million for the same period. Seacoast Banking Corporation aims to exceed a 1% return on assets by 2025.
Despite facing challenges due to recent hurricanes, the corporation expressed confidence in its growth trajectory and shareholder value enhancement. Moreover, the bank is open to future mergers and acquisitions opportunities, prioritizing strong organic growth. These are among the recent developments at Seacoast Banking Corporation.
InvestingPro Insights
Seacoast Banking Corporation's (NASDAQ:SBCF) financial landscape offers additional context to the recent analyst update. According to InvestingPro data, the company's P/E ratio stands at 19.37, with an adjusted P/E ratio of 15.34 for the last twelve months as of Q3 2024. This aligns with Stephens' observation about the bank's valuation relative to its peers.
InvestingPro Tips highlight that Seacoast Banking has raised its dividend for 4 consecutive years, which may appeal to income-focused investors. The current dividend yield is 2.73%, as reported in the latest data. This consistent dividend growth, coupled with the company's profitability over the last twelve months, supports the bank's financial stability narrative.
However, an InvestingPro Tip also points out that SBCF is trading at a high P/E ratio relative to near-term earnings growth, with a PEG ratio of 1.75. This metric reinforces Stephens' caution regarding the premium valuation based on P/TBV.
For investors seeking a more comprehensive analysis, InvestingPro offers 5 additional tips for Seacoast Banking Corporation, providing a deeper dive into the company's financial health and market position.
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