On Tuesday, Midland States Bancorp (NASDAQ:MSBI) saw its stock price target adjusted by Stephens, with the investment firm citing several factors influencing their decision. The price target was lowered to $27.00 from the previous $29.00 while the Equal Weight stock rating was maintained.
The adjustment follows Midland States Bancorp's first-quarter earnings, which were positively influenced by the company's pre-provision net revenue (PPNR) trends and successful balance sheet management. The firm's core net interest margin (NIM) demonstrated relative stability, and its investments in wealth management were highlighted as key takeaways from the last quarter.
Still, the company's recent market underperformance has been attributed to an increase in nonaccrual loans, including three multifamily projects, which impacted the quarterly NIM by approximately 5 basis points. Additionally, the earnings per share (EPS) were affected by provision-related misses.
Stephens' revised estimates suggest a continued decline in GreenSky and equipment finance loans, which is expected to be counterbalanced by growth in community bank commercial loans and securities. The report also noted that Midland States Bancorp considers St. Louis a priority market for loan growth and mentioned the appointment of a new leader in the region late last year.
Despite the lowered stock price target, Stephens acknowledged Midland States Bancorp's relatively low valuation, which stands at 7.6 times the projected 2025 EPS and 0.95 times the tangible book value (TBV). The firm's evaluation reflects cautious optimism, taking into account the credit trends from the last quarter.
InvestingPro Insights
As Midland States Bancorp (NASDAQ:MSBI) navigates through the challenges highlighted by Stephens, current metrics from InvestingPro provide additional context for investors. With a market capitalization of $483.42 million and a lower-than-industry-average P/E ratio of 8.37 as of Q1 2023, MSBI presents a value-oriented profile.
The company's dividend yield stands at an attractive 5.51%, a testament to its commitment to shareholder returns, having raised its dividend for 8 consecutive years and maintained payments for 9 years. Despite recent price volatility, with a 1-week total return of -7.52%, analysts within the InvestingPro platform predict profitability for the year, supported by a solid operating income margin of 39.33% in the last twelve months.
InvestingPro Tips further enrich the analysis, noting MSBI's high shareholder yield and the expectation of profitability based on recent performance. For investors seeking deeper insights, the InvestingPro platform lists several additional tips that could guide investment decisions. To explore these further and gain a comprehensive understanding of MSBI's financial health and future prospects, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro.
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