On Wednesday, Raymond James adjusted its financial outlook for Dime Community Bancshares, Inc. (NASDAQ:DCOM), decreasing the price target to $27 from the previous $30 while maintaining an Outperform rating on the stock.
The firm recognized Dime Community's recent progress, highlighting the acquisition of a deposit team from VLY and an intra-quarter deposit update that demonstrated significant market share gains, leading to a reduced loan-to-deposit ratio for the company.
The analyst from Raymond James noted that these developments indicate Dime Community is successfully expanding its deposit franchise, which is expected to enhance the company's franchise value over the longer term. Despite the current market disruptions, the analyst anticipates that Dime Community will likely continue attracting new customers and talent in the forthcoming quarters.
The report acknowledged that while the company's strategic moves may lead to increased expenses in the near term, they are anticipated to contribute positively to the overall franchise value. This, coupled with the potential growth in commercial and industrial (C&I) loans, is seen as favorable for Dime Community's long-term prospects.
However, the revised price target of $27 reflects a broader trend of lower industry valuations and a slight downward revision of estimates, despite the positive company update.
The analyst also mentioned the expectation of an upward adjustment to loan loss reserves over time, which factored into the updated price target.
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