On Wednesday, Columbia Banking System (NASDAQ:COLB) had its price target adjusted by DA Davidson from the previous $25.00 to a new target of $20.00, with the firm maintaining a Neutral rating on the stock. The reduction in the price target is attributed to revised earnings per share (EPS) estimates for the years 2024 and 2025.
The updated EPS estimates have been decreased from $2.35 and $2.65 to $2.30 and $2.60 for 2024 and 2025, respectively. DA Davidson noted that while a lower anticipated expense run rate positively influenced the EPS—adding about $0.15 and $0.35 per share for 2024 and 2025—other negative adjustments outweighed these benefits.
Among the factors leading to the lowered EPS forecast were a reduced net interest margin (NIM) forecast, which changed from 3.59% and 3.63% to 3.53% and 3.55% for 2024 and 2025, respectively. Additionally, an increase in provision expense from $120.0 million and $100.0 million to $145.0 million and $147.5 million, a lower loan growth assumption from 1.5% and 6.0% to 1.0% and 5.0%, and a slightly higher tax rate from 26.0% to 26.5% also contributed to the downward revision.
The new price target of $20.00 is based on 7.7 times the firm's 2025 EPS estimate and 1.2 times the current tangible book value (TBV). Despite the adjustments, DA Davidson has chosen to keep a Neutral stance on Columbia Banking System shares, indicating the anticipated upside to the new target price.
InvestingPro Insights
As DA Davidson revises its price target for Columbia Banking System (NASDAQ:COLB), investors may find additional context from InvestingPro data and insights helpful. According to recent metrics, COLB currently has a market capitalization of approximately $4.05 billion, with a P/E ratio that stands at 10.78. When adjusted for the last twelve months as of Q4 2023, this P/E ratio becomes even more attractive at 8.54. This could indicate that the stock is undervalued compared to its earnings.
InvestingPro Tips suggest that while Columbia Banking System suffers from weak gross profit margins, the company has been able to maintain dividend payments for an impressive 28 consecutive years. This commitment to shareholder return is further underlined by the stock's substantial dividend yield of 7.47% as of the latest data, making it a significant consideration for income-focused investors. Additionally, despite the price drop over the last three months, analysts predict the company will remain profitable this year, which is corroborated by its profitability over the last twelve months.
For investors looking to delve deeper into Columbia Banking System's financials, there are additional InvestingPro Tips available that can provide further insights into the company's performance and outlook. To access these tips and enhance your investment research, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.