On Wednesday, Piper Sandler assumed coverage on MidWest One Financial Group, Inc. (NASDAQ:MOFG) with a Neutral rating and a price target of $24.00. The firm set the price target based on 8.5 times the estimated earnings per share (EPS) for the year 2025, noting this valuation is at a discount compared to the 9.1 times average of its peers.
This discount reflects the analyst's view of MidWest One's less favorable profitability outlook over the next couple of years.
MidWest One, a financial institution with its headquarters in Iowa City, Iowa, manages $6.4 billion in assets and operates 57 banking offices across Iowa, the Twin Cities MSA, and Denver, Colorado. The company welcomed industry veteran Chip Reeves as its CEO in late 2022, who has since introduced a strategic plan aimed at achieving financial results comparable to its peers by the end of 2025.
The analyst pointed out that while the current challenging interest rate environment has pushed back the timeline for achieving these financial targets, MidWest One has made solid progress in executing its strategic objectives. The firm believes that MidWest One's long-term prospects look promising following the implementation of these initiatives.
Piper Sandler's stance on MidWest One could shift to a more positive outlook with evidence of stronger organic core deposit and loan growth, which is currently anticipated to be in the mid-to-high single digits. Additionally, the firm suggests that further cost reallocations towards more profitable business areas could also contribute to a more constructive view of the bank's stock.
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