Keefe Bruyette lowers Simmons First stock target to $20, maintains rating

Keefe, Bruyette & Woods revised its price target on Simmons First Nation Corporation (NASDAQ: SFNC ) to $20.00 from the previous price of $21.00 on Thursday. The firm maintained its market perform rating on the bank's stock. The revision comes after the company reported first-quarter 2024 earnings, which missed Keefe, Bruyette & Woods and consensus estimates, primarily due to lower-than-expected net interest income (NII).

The bank's net interest margin (NIM) edged down 2 basis points to 2.66%, below the company's forecast of 2.75%. Analysts at Keefe, Bruyette & Woods expect net interest margins may see some compression in the second quarter of 2024 but expect them to widen in the second half. Simons First National largely reiterated its forward guidance despite profit missing expectations.

The ratio of non-performing assets (NPA) to loans and other real estate (OREO) rose to 0.66% from 0.54% in Q4 2023. Given these factors, Keefe, Bruyette & Woods has lowered its profit forecasts for 2024 and 2025 to $1.29 and $1.50, respectively, bringing its NII forecast closer to market expectations.

The earnings forecast cut resulted in a price target for Simmons First National stock being cut to $20.00, while a Market Perform rating suggests the company doesn't think the stock will outperform in the near term.

Investment Professional Insights

Simmons First National Corporation (NASDAQ: SFNC ) has demonstrated a commitment to shareholder returns, as evidenced by its exceptional record of raising its dividend for 12 consecutive years. This is further reinforced by the company's ability to maintain dividend payments for 51 consecutive years. With a current dividend yield of 4.61%, investors looking for stable income may find Simmons First National an attractive option.

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InvestingPro Tips shows that analysts are optimistic about the company's profitability, with 3 analysts raising earnings for the coming period and predicting that the company will remain profitable this year. While recent earnings missed the mark, it was in line with the bank's own reiterated forward guidance. The bank's operating margin for the trailing 12 months to the first quarter of 2024 was as high as 31.67%, highlighting its operating efficiency, which may be a key factor for investors in assessing the bank's fundamental strength.

Notably, the company has experienced significant gains over the past six months, with a total return of 32.14%, reflecting investor confidence and market momentum. While the bank faces challenges such as a decline in net interest income and a slight rise in nonperforming assets, these InvestingPro tips suggest Simmons First National has potential advantages that may appeal to some investors.For those interested in further analysis, additional tips are available on InvestingPro and users can take advantage of coupon codes PRONEWS24 Annual or biennial Pro and Pro+ subscriptions receive an additional 10% discount.

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