On Tuesday, Piper Sandler adjusted its stock price target for First Western Financial (NASDAQ:MYFW), increasing it to $23.00 from the previous $22.00. The firm maintained a Neutral rating on the stock. The $203 million market cap bank has seen its shares surge by over 26% in the past six months.
The adjustment follows a recent meeting with First Western Financial's executive team, including CEO Scott Wylie, CFO David Weber, and COO Julie Courkamp, where they discussed the bank's net interest margin (NIM) outlook, credit situation, and potential mergers and acquisitions among other topics. According to InvestingPro analysis, the stock is currently trading slightly above its Fair Value.
Piper Sandler revised its earnings per share (EPS) estimates for the fourth quarter of 2024 and the full years of 2025 and 2026. The new EPS forecasts are $0.34, $1.74, and $2.37, respectively, marking a decrease from the previous estimates of $0.38, $1.85, and $2.50. This aligns with InvestingPro data showing that two analysts have recently revised their earnings estimates downward. The reduction in EPS expectations stems from a more conservative NIM outlook.
Despite the lowered EPS estimates, the price target was raised to reflect a higher earnings multiple of 13.0 times the firm's projected 2025 earnings per share. This is an increase from the previous multiple and is still below the 14.0 times earnings multiple of First Western Financial's fee-heavy revenue peers.
Currently trading at a P/E ratio of 80.65x, the stock's valuation reflects the ongoing credit overhang that the bank needs to address, weaker profitability metrics, and the bank's potential to increase market share in its dynamic footprint, supported by a relatively large wealth management platform. Get deeper insights into First Western Financial's valuation metrics and more with a comprehensive Pro Research Report, available exclusively on InvestingPro.
The new price target is also influenced by the company's ability to navigate through its credit situation and the competitive landscape. Piper Sandler's revised outlook on First Western Financial provides investors with updated guidance on the bank's financial prospects in the coming years.
In other recent news, First Western Financial has reported a significant increase in its Q3 2024 earnings. The company's net income reached $2.1 million, doubling from the previous quarter. This growth was accompanied by an increase in assets under management and total deposits, despite a slight decrease in the net interest margin (NIM).
The bank's loan-to-deposit ratio met its target at 95%. Non-interest-bearing deposits saw a 19% growth, with total deposits rising by $92 million. However, loans held for investment decreased by $73 million, and non-performing assets rose to $52.1 million due to a significant loan moving to non-accrual status.
These are recent developments for First Western Financial. The bank is optimistic about future growth, expecting declining interest rates to enhance net interest margins and mortgage income. It also anticipates a substantial cash influx from the sale of properties linked to a significant non-performing loan. Despite some challenges, the bank is shifting from a defensive posture to a growth-oriented strategy over the next 12 to 18 months.
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