RBC Capital has adjusted its price target for Prosperity Bancshares (PB, Financial), reducing it from $85 to $78. Despite this revision, the firm maintains a Sector Perform rating on the bank's shares.
The decision comes as the financial institution shows strong operational trends, marked by increased margins and effective management of expenses. Additionally, the company's credit health remains robust, supporting a strategy of maintaining no loan loss provisions.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 13 analysts, the average target price for Prosperity Bancshares Inc (PB, Financial) is $84.38 with a high estimate of $95.00 and a low estimate of $77.00. The average target implies an upside of 25.44% from the current price of $67.27. More detailed estimate data can be found on the Prosperity Bancshares Inc (PB) Forecast page.
Based on the consensus recommendation from 14 brokerage firms, Prosperity Bancshares Inc's (PB, Financial) average brokerage recommendation is currently 2.1, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Prosperity Bancshares Inc (PB, Financial) in one year is $80.39, suggesting a upside of 19.5% from the current price of $67.27. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Prosperity Bancshares Inc (PB) Summary page.
PB Key Business Developments
Release Date: April 23, 2025
- Net Income: $130 million for Q1 2025, up from $110 million in Q1 2024, a 17.9% increase.
- Net Income per Diluted Share: $1.37 for Q1 2025, up from $1.18 in Q1 2024, a 16.1% increase.
- Return on Average Assets: 1.34% for Q1 2025.
- Return on Average Tangible Common Equity: 13.23% for Q1 2025.
- Efficiency Ratio: 45.7% for Q1 2025.
- Loans: $21.9 billion as of March 31, 2025, a 3.3% increase from March 31, 2024.
- Deposits: $28 billion as of March 31, 2025, a 3.1% increase from March 31, 2024.
- Net Interest Margin: 3.14% for Q1 2025, up from 2.79% in Q1 2024.
- Noninterest Income: $41.3 million for Q1 2025.
- Noninterest Expense: $140.3 million for Q1 2025.
- Nonperforming Assets: $81.4 million as of March 31, 2025.
- Allowance for Credit Losses: $386 million as of March 31, 2025.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Prosperity Bancshares Inc (PB, Financial) reported a significant increase in net income, reaching $130 million for Q1 2025, up from $110 million in Q1 2024, marking a 17.9% increase.
- The company maintained a high tangible equity to tangible asset ratio of 11.2%, with tangible equity amounting to $3.9 billion.
- Net interest margin improved to 3.14% for Q1 2025, up from 2.79% in the same period in 2024, indicating better profitability.
- Prosperity Bancshares Inc (PB) has strong noninterest-bearing deposits, constituting 34.5% of total deposits as of March 31, 2025.
- The company continues to explore acquisition opportunities, maintaining active conversations with other banks, which could lead to future growth.
Negative Points
- Loans excluding Warehouse Purchase Program loans and loans acquired in the Lone Star merger decreased by $67.6 million compared to December 31, 2024.
- Linked-quarter deposits decreased by $354 million from December 31, 2024, primarily due to seasonality.
- Nonperforming assets remained flat at $81.4 million, indicating persistent asset quality challenges.
- The allowance for credit losses increased to $386 million at March 31, 2025, up from $366 million in the previous year, reflecting ongoing credit risk concerns.
- The company faces market volatility and uncertainty with tariffs, which could impact future growth and profitability.
