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On Friday, Keefe, Bruyette & Woods (KBW) revised its stance on Banc of California (NYSE:), upgrading the stock from Market Perform to Outperform and increasing the price target to $18.00 from the previous $16.00.
The financial institution has been recognized for its strategic efforts to reduce non-interest and interest expenses, which are anticipated to contribute significantly to its profitability targets.
According to the upgrade, Banc of California has outlined up to seven different strategies to achieve its profitability goals, indicating a diversified approach rather than reliance on a single method. This multifaceted plan aims to reach an approximate return on average assets (ROAA) of 1.1% and a return on tangible common equity (ROTCE) of 13% by the fourth quarter of 2024.
KBW’s analysis suggests that Banc of California’s earnings per share (EPS) for the fourth quarter of 2024 could reach $0.45. This figure annualizes to an EPS of $1.80, correlating to a ROAA of 1.0% and a ROTCE of 12.4%. These projections are slightly more conservative than the current guidance provided by the bank.
The firm’s evaluation of potential outcomes for Banc of California’s stock presents a positive bias, with a more than 2:1 ratio of upside to downside (+29% versus -13%). In an optimistic scenario, this ratio could expand to nearly 4:1 (+50% versus -13%). The analysis emphasizes that the bank’s success in both base case and upside scenarios is likely to be driven by its internal initiatives rather than external economic factors.
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