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On Wednesday, Stephens, a financial services firm, updated its outlook on Nicolet Bankshares (NASDAQ:NCBS) (NYSE: NIC (NASDAQ:EGOV)), raising the price target to $112 from the previous $105 while retaining an Equal Weight rating on the stock. The firm's analysis points to continued positive momentum for Nicolet, following a strong performance in the second quarter of 2024, where operational earnings per share (EPS) and pre-provision net revenue (PPNR) exceeded consensus estimates by approximately 9%.
The analyst's commentary highlighted Nicolet's ability to expand its market share, particularly as larger banks shift their focus. The bank is expected to see a boost in its net interest margin (NIM) due to the repricing of $750 million in fixed-rate loans over the coming year. Additionally, wealth management has emerged as a growing strength for Nicolet, with fees increasing by 16% year to date.
Credit trends at Nicolet have remained solid in the third quarter of 2023, with net charge-offs (NCOs) at only 2 basis points. The company's strategic acquisitions from 2019 through 2022 have positioned it favorably for future mergers and acquisitions (M&A) opportunities in the Upper Midwest. Notably, Nicolet has not repurchased stock for five consecutive quarters, allowing for capital accumulation.
Nicolet's stock is currently trading above its peers at two times tangible book value (TBV) and 12.1 times the firm's updated 2025 earnings estimate. This valuation opens the door for potential deals, as suggested by the analyst's remarks. Despite the increased price target, the firm has decided to maintain the Equal Weight rating, indicating a neutral stance on the stock's current valuation.
In other recent news, Nicolet Bankshares has been experiencing a series of positive developments. The company reported strong second-quarter results, with earnings per share of $1.89, surpassing both consensus and Maxim Group's estimates. The performance was attributed to an expanded net interest margin, a 2% increase in loan growth, and sustained strong credit quality. Following these results, Maxim Group raised its price target for Nicolet Bankshares to $120, maintaining a Buy rating.
Similarly, Stephens and Piper Sandler also revised their price targets for the company to $110 and $104, respectively, after the robust second-quarter performance. Nicolet Bankshares demonstrated a significant recovery in deposit trends and a 14% year-over-year increase in Wealth Management fees. Furthermore, the company increased its dividend by 12% to $0.28 per share, reflecting its commitment to returning capital to its investors.
Piper Sandler, while maintaining a Neutral rating, increased its price target for Nicolet Bankshares to $104, citing a strong quarter with a 1.3% return on assets and a 16.8% return on tangible common equity. The company's pre-provision net revenue exceeded expectations by 15%, primarily driven by robust net interest income, solid balance sheet growth, and well-managed operating expenses.
InvestingPro Insights
Recent data from InvestingPro adds depth to Stephens' analysis of Nicolet Bankshares (NYSE: NIC). The company's P/E ratio of 12.85 aligns closely with the 12.1 times 2025 earnings estimate mentioned in the article, supporting the analyst's valuation assessment. This relatively low P/E ratio, combined with the company's strong revenue growth of 28.93% over the last twelve months, suggests that NIC may be undervalued relative to its growth potential.
InvestingPro Tips highlight that Nicolet is trading near its 52-week high, with a substantial price uptick of 28.09% over the last six months. This trend corroborates the article's positive outlook on the company's performance and market position. Additionally, the company's profitability over the last twelve months and analysts' predictions of continued profitability this year reinforce the strong operational performance noted in the article.
For investors seeking a more comprehensive analysis, InvestingPro offers 7 additional tips that could provide further insights into Nicolet Bankshares' financial health and market position.
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