MidWest One shares get price target raise with Neutral rating
On Monday, MidWest One Financial (NASDAQ:MOFG) experienced an adjustment in its stock outlook as Piper Sandler increased the price target on the company’s shares to $30.00, up from the previous target of $22.00. The firm retained a Neutral rating on the bank’s stock.
The revision follows a quarter that Piper Sandler described as “solid” despite the noise from the intra-quarter closing sale of MidWest One’s Florida operations. The firm highlighted a 7% positive pre-provision net revenue (PPNR) surprise, driven by greater net interest margin (NIM) expansion and stronger core fee income. Asset quality was noted to be benign, with low net charge-offs (NCOs) and sequential improvement across all credit metrics.
Piper Sandler’s stance on the bank remains positive regarding the ongoing execution of MidWest One’s strategic transformation plan. The plan, under the leadership of relatively new CEO Chip Reeves, focuses on cost reallocation into higher multiple businesses and better-scaled markets. Despite this, the firm’s Neutral position is maintained due to MidWest One’s below-average return outlook and potential future Federal Reserve rate cuts.
Furthermore, Piper Sandler has adjusted its 2024 estimated operating earnings per share (EPS) for MidWest One to $2.10, an increase of $0.05, largely to reflect the second-quarter upside. The 2025 earnings estimate remains unchanged at $2.70.
The new price target of $30 reflects an 11.0 times multiple on the firm’s 2025 estimated EPS, which is an increase from the previous multiple and aligns with higher peer multiples. However, this valuation still represents a moderate discount to peers, who are valued at an average of 11.8 times, due to MidWest One’s sub-optimal profitability outlook.
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