Heritage Commerce target raised by Keefe Bruyette on 2Q results By Investing.com

Keefe, Bruyette & Woods has adjusted its price target on shares of Heritage Commerce (NASDAQ: NASDAQ:), increasing it to $11.50 from the previous $10.50 as the firm maintained its Outperform rating on the stock on the back of second-quarter earnings for 2024, which showed a mix of slight misses and beats in various financial metrics.

According to Keefe, Heritage Commerce’s earnings per share (EPS) for the second quarter fell short of both Keefe, Bruyette & Woods and the consensus estimates due to a 2 cents per share miss in expenses and a 1 cent per share miss in net interest income (NII), though this was partially offset by a 1 cent per share beat in provisions.

The net interest margin (NIM) saw a decline of 8 basis points from the last quarter to 3.26%.

Despite the decline in NIM, the firm pointed to positive underlying trends, such as stabilizing deposit costs and scheduled bond maturities, which could signal a potential inflection in NIM in the second half of 2024. Loan growth remained consistent at 5% on a last quarter annualized basis. The firm also noted that expenses are anticipated to reduce to the $27-28 million range on a quarterly basis.

In conjunction with the earnings report, Heritage Commerce announced a new share repurchase authorization valued at $15 million. Keefe also updated its earnings estimates for Heritage Commerce for the years 2024 and 2025 to $0.65 and $0.72 per share, respectively.

Meanwhile, Piper Sandler raised Heritage Commerce’s price target to $12.00 from $10.00, while maintaining an Overweight rating on the stock following the release of the company’s second-quarter earnings report for 2024, which recorded earnings per share (EPS) of $0.15. The report revealed a lower-than-expected net interest income and higher operational expenses, affecting the EPS.

In contrast, the first quarter earnings report showed an EPS of $0.17, leading Piper Sandler to reduce the price target to $10 from $11, despite keeping an Overweight rating. The reduced earnings were attributed to a decline in net interest income and increased expenses.

InvestingPro Insights

Recent analysis from InvestingPro has highlighted a few key points for investors considering Heritage Commerce (NASDAQ:HTBK). An InvestingPro Tip points out that analysts have revised their earnings estimates downwards for the upcoming period, which could be a signal to investors to recalibrate their expectations. Additionally, the Relative Strength Index (RSI) suggests the stock is currently in overbought territory, which typically indicates a stock may be due for a correction or pullback.

On the data front, Heritage Commerce has a market capitalization of $641.35M and a P/E ratio of 13.19, which has adjusted to 11.53 when looking at the last twelve months as of Q1 2024. The company’s dividend yield stands at an attractive 4.86%, with Heritage Commerce having maintained dividend payments for 12 consecutive years. Despite a revenue decline of 9.27% over the last twelve months as of Q1 2024, the company has experienced strong price total returns of 36.01% over the last three months, which aligns with the positive sentiment reflected in the updated price target from Keefe, Bruyette & Woods.

To delve deeper into Heritage Commerce’s financial health and for a comprehensive list of additional InvestingPro Tips, investors can visit InvestingPro. For those interested in a subscription, use coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription. With 9 additional tips available on InvestingPro, investors can gain an edge in making more informed decisions.

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