On Monday, Citi updated its outlook on Cadence BanCorp (NYSE: CADE), raising the stock's price target from $30.00 to $35.00 while maintaining a Neutral rating.
The adjustment comes after observing the bank's performance in the first half of 2024, where Cadence BanCorp displayed a slightly faster growth rate compared to its regional competitors. Additionally, the bank managed to keep deposit costs well-controlled during this period.
Cadence BanCorp's growth trajectory and cost management have set it up favorably for the second half of 2024 and into 2025. The bank is anticipated to organically produce a higher net interest margin (NIM) and a lower than expected net charge-off (NCO) output. These factors have contributed to the bank's modest premium compared to its peers, which Citi considers justified.
The firm also recognizes Cadence BanCorp's strategic use of excess capital for opportunistic share buybacks, while also keeping reserves for potential future investments beyond core growth initiatives. Such financial strategies underscore the bank's solid positioning for generating a robust return on tangible common equity (ROTCE).
Despite the positive indicators, Citi's stance remains neutral. The firm acknowledges the bank's strong fundamental position but prefers to wait for a more attractive valuation before changing its rating. This cautious approach reflects a wait-and-see attitude towards Cadence BanCorp's stock performance in the near future.
In other recent news, Cadence Bancorp has reported a strong financial performance in its second quarter of 2024, with a GAAP net income of $135.1 million and an adjusted net income from continuing operations of $127.9 million.
The bank also saw a significant loan growth of $430 million, despite a slight decrease in total deposits. Operational efficiencies were also highlighted, with a decrease in adjusted expenses by over $12 million.
RBC (TSX:RY) Capital Markets, following these results, has raised Cadence Bancorp's stock target from $31.00 to $35.00, maintaining a Sector Perform rating. This adjustment recognizes the bank's ability to manage costs effectively while maintaining strong core operations.
Additionally, DA Davidson and Truist Securities have also given favorable assessments of Cadence Bancorp. DA Davidson increased its price target for the bank to $39, following a 4% increase in revenue and lower-than-expected expenses.
Similarly, Truist Securities raised its price target to $38, after the bank's earnings and pre-provision net revenue results surpassed expectations.
InvestingPro Insights
As Cadence BanCorp (NYSE: CADE) navigates through 2024, real-time data from InvestingPro provides a deeper understanding of the bank's financial health and market performance. The bank's market capitalization stands at a robust $6.11 billion, reflecting investor confidence. Its price-to-earnings (P/E) ratio is currently at 10.3, which indicates that the stock may be reasonably valued in the context of its earnings. However, it's worth noting that the adjusted P/E ratio based on the last twelve months as of Q2 2024 is significantly higher at 89.4, suggesting expectations of substantial earnings growth ahead.
InvestingPro Tips highlight that Cadence BanCorp has a history of rewarding shareholders, having raised its dividend for 11 consecutive years. This consistent dividend growth, coupled with a dividend yield of 2.98% as of mid-June 2024, may appeal to income-focused investors. Furthermore, analysts have revised their earnings expectations upwards for the upcoming period, indicating potential for continued financial performance improvement.
For those considering an investment in Cadence BanCorp, additional InvestingPro Tips can offer further insights. There are over 7 more tips available, which can guide investors in making a more informed decision. To explore these tips and gain a comprehensive analysis, visit https://www.investing.com/pro/CADE and remember to use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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