Source: Investing Posted 14/10/2024, 15:26
Stevens Financial Services on Monday downgraded First Corporation (NASDAQ:BUSE) stock rating from “higher weight” to “equal weight” and lowered its price target to $27 from $28 previously. This amendment comes in the wake of investor reactions to First Bossy’s recent acquisition of Cross First., which was mostly conservative.
The analyst from Stevens noted that investor reactions after takeover announcements are usually mixed. In this case, the market response to First Posey’s acquisition was remarkably cautious. Concerns raised by investors include the challenges high-performing banks face when acquiring a low-performing bank, differences in pricing and credit cultures.
and expected management changes that are expected to occur 12-18 months after the transaction is completed.
Moreover, there are doubts about the expected low valuation of the joint entity after the acquisition. Despite the downgrade, the analyst acknowledged First Posey’s historic success in merging acquisitions, expressing confidence in management’s ability to successfully merge the two banks.
The analyst also believes that First Posey can achieve growth in earnings per share (EPS) and continue to expand its fee-based business into new markets. However, prevailing investor sentiment led to a more cautious view of BUSE shares.
which is reflected in the downgrade and price target. The new $27 target represents a slight decline from the previous $28.
First Corporation announced a quarterly cash dividend of $0.24 per share.
$6.3 billion in loans and $6.7 billion in deposits to First Posey’s portfolio.
Piper Sandler maintained its “higher weight” rating of First Boss shares following the announcement of this merger. In addition, DA Davidson Financial Services maintained a neutral stance towards First with an adjusted target price of $24.
reflecting its recalibrated earnings per share estimates for 2024 and 2025.
First Posey’s merger, valued at $916.8 million, aims to enhance its competitive advantage in the banking sector, especially in wealth management offerings. They anticipate completing the acquisition in the first half of 2025.
with the joint venture projected to operate with assets totaling approximately $20 billion.
$15 billion in loans, and $17 billion in deposits.
These latest developments illustrate First’s strategic growth and commitment to shareholder value.
Recent data from Investing provides additional context for First’s current financial position (NASDAQ:BUSE) and its market performance. Despite the downgrade by Stevens, BUSE still maintains a relatively attractive valuation with a price-to-earnings ratio of 12.76.
suggesting that the stock may still offer value to investors.
The dividend yield may attract the company of 3.8% and its impressive record of maintaining dividend payments for 36 consecutive years.
as highlighted by one of Investing’s tips, income-focused investors. Another tip from Investing suggests that analysts expect the company to be profitable this year.
which is in line with Stevens’ analyst’s confidence in First Posey’s ability to deliver earnings per share growth after the acquisition.
However, it should be noted that the company suffers from weak gross profit margins.
which may be a factor in investors’ cautious feeling mentioned in the article. The one-year gross earnings per share of 38.21% indicates a strong performance over the past year.
which may reflect the market’s previous optimism about the company’s outlook.
As investors analyze the effects of the Cross First acquisition.
they may want to consider these metrics along with the analyst’s “wait and see” approach.
