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Investar Holding To See Lower Net Interest Margin Upside In "Higher For Longer" Environment In FY24: Analyst

Published 05/10/2023, 20:05
Updated 05/10/2023, 21:10
© Reuters.  Investar Holding To See Lower Net Interest Margin Upside In "Higher For Longer" Environment In FY24: Analyst
ISTR
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Benzinga - by Lekha Gupta, Benzinga Editor.

Piper Sandler analyst Graham Dick upgraded Investar Holding Corp (NASDAQ: ISTR) to Overweight from Neutral with a price target of $13.5.

The upgrade is due to the analyst's view of valuation 'becoming unreasonably depressed' given the bank's modest earnings outlook.

The analyst finds ISTR's CET1 ratio of about 10% as comforting and slower balance sheet growth but sees accumulated other comprehensive income (AOCI) worsening in Q3 on rate movements.

The analyst revised EPS estimates to $1.73 (from $1.70) for FY23 and $1.14 (from $1.16) for FY24, assuming slightly better near-term net interest margins on lower average borrowings.

However, the analyst sees the net interest margin to have less growth in FY24 amid a "higher for longer" environment, given ISTR's liability-sensitive balance sheet.

Consequently, the analyst sees EPS exiting FY24 at around an annual run-rate of $1.40 on the continued realization of the benefit of fixed-rate loan repricing (~80% of total loans) and expects any future federal funds rate cuts to boost EPS trends.

Price Action: ISTR shares are trading higher by 7.92% at $11.18 on the last check Thursday.

Latest Ratings for ISTR

Oct 2021Piper SandlerDowngradesOverweightNeutral
Jan 2021Piper SandlerUpgradesNeutralOverweight
Sep 2020DA DavidsonDowngradesBuyNeutral

View the Latest Analyst Ratings

© 2023 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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