On Friday, Piper Sandler adjusted its outlook on AvidBank Holdings Inc. (OTC: AVBH), reducing the price target from $24.00 to $23.00 while maintaining an Overweight rating on the stock. This adjustment comes after AvidBank reported first-quarter 2024 earnings per share (EPS) of $0.69, surpassing both Piper Sandler's estimate by one cent and the consensus on Wall Street by five cents.
The bank's provision for credit losses was notably smaller than Piper Sandler had anticipated, contributing $0.06 per share to the earnings upside. Additionally, AvidBank's fee income exceeded expectations by $0.02, and net interest income (NII) was higher by $0.01 due to a larger earning asset base than forecasted. The bank's net interest margin (NIM) increased by 5 basis points to 3.54%, although this was slightly below Piper Sandler's prediction of 3.57%.
Despite the positive performance in certain areas, AvidBank encountered higher expenses than Piper Sandler had modeled, which had a negative impact of $0.08 on the EPS. In response to these results, Piper Sandler has made several adjustments to its model for AvidBank. These include expectations of thinner margins, stronger fee income, and higher expenses to support the bank's growth.
As a consequence of these revisions, Piper Sandler has lowered its EPS forecasts for AvidBank for the years 2024 and 2025 by $0.15 to $2.75 and $3.00, respectively. The firm's analysts have cited these updated projections as the rationale behind the decision to decrease the price target for AvidBank's stock.
InvestingPro Insights
Following Piper Sandler's recent adjustments to AvidBank Holdings Inc.'s (OTC: AVBH) outlook, InvestingPro data paints a broader picture of the company's financial health. AvidBank's market capitalization stands at $149.6 million, with an attractive price-to-earnings (P/E) ratio of 8.92, reflecting investor sentiment on its earnings potential. Notably, analysts have revised their earnings upwards for the upcoming period, signaling confidence in the bank's profitability, which aligns with the company's performance over the last twelve months. Furthermore, AvidBank boasts a strong operating income margin of 33.32%, suggesting efficient management of its operations relative to its peers.
Despite some challenges, such as a slight revenue decline of 13.69% over the last twelve months as of Q1 2024, AvidBank has maintained profitability. According to InvestingPro Tips, analysts predict the company will be profitable this year, supporting the notion that AvidBank is on a stable financial footing. However, it's worth noting that the company does not pay a dividend, which may influence investment decisions for those seeking regular income from their holdings. For investors seeking a more comprehensive analysis, there are additional InvestingPro Tips available, providing deeper insights into AvidBank's financial nuances.
For those considering an investment in AvidBank, make sure to explore these insights and more on InvestingPro. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. With this information in hand, investors can make more informed decisions about the potential risks and rewards associated with AvidBank's stock.
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