On Monday, Piper Sandler increased its price target on shares of BancFirst (NASDAQ:BANF) to $95.00 from the former $84.50. Despite the price target hike, the firm kept its Underweight rating on the stock.
The adjustment comes after BancFirst exhibited robust profitability in the second quarter, with a return on assets (ROA) of 1.6% and a return on tangible common equity (ROTCE) of 16%. The bank also reported a 5% pre-provision net revenue (PPNR) upside, attributed to net interest margin (NIM) expansion and significant loan growth, which exceeded stable expectations.
The bank's performance in the second quarter prompted Piper Sandler to revise its earnings per share (EPS) estimates for 2024 and 2025 to $6.10 and $5.90, up from $5.70 and $5.45, respectively. The firm's analysis credits BancFirst's high-quality status among small to mid-cap (SMID) banks to its consistent superior return profile over various cycles, a history of benign credit quality, and other positive attributes.
Despite these strengths, Piper Sandler anticipates limited potential for price-to-earnings (P/E) ratio expansion above peers for BancFirst. The firm also notes a lack of clarity on the bank's plans for deploying excess capital, particularly in mergers and acquisitions.
The new stock price target of $95 reflects a P/E multiple of 16.0 times, which is an increase of 0.5 times in line with higher peer multiples. This valuation represents approximately a threefold premium compared to BancFirst's high-performing peers, which trade at 13.1 times, and aligns with the bank's long-term average.
Piper Sandler's Underweight rating remains in place, suggesting that the firm sees potential downside for BancFirst based on the current valuation framework, despite the bank's strong second-quarter performance and upwardly revised EPS estimates.
InvestingPro Insights
Following the recent price target update by Piper Sandler, BancFirst's (NASDAQ:BANF) financial metrics and analyst outlook further illustrate the bank's standing in the market. With a robust Market Cap of approximately $3.46 billion and a solid P/E Ratio of 17.51, BancFirst demonstrates a strong market presence.
The bank's consistent performance is underscored by an impressive dividend track record, having raised its dividend for 26 consecutive years, a testament to its financial stability and shareholder value commitment. Moreover, the bank has been trading near its 52-week high, with the price standing at 97.44% of this peak, signaling investor confidence.
Investors considering BancFirst may find it interesting that three analysts have recently revised their earnings upward for the upcoming period, indicating a positive outlook on the bank's financial prospects. BancFirst has shown a significant return over the last week, with a 1 Week Price Total Return of 11.25%, which may reflect market sentiment following the positive earnings revisions and the bank's robust profitability metrics.
For those seeking more in-depth analysis, there are additional InvestingPro Tips available, providing valuable insights into BancFirst's financial health and future potential. Readers can explore these tips and more by visiting InvestingPro, and take advantage of the exclusive offer using coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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