Esquire Financial shares target raised by Keefe on NIM growth

Esquire Financial Holdings (NASDAQ: NASDAQ:) saw its price target increased by Keefe, Bruyette & Woods from $62.00 to $68.00, while the firm maintained an Outperform rating on the stock after the company posted second-quarter operating earnings per share (EPS) of $1.25, surpassing the firm’s projections by $0.06.

Esquire Financial’s total deposit costs decreased by 9 basis points quarter-over-quarter. At the same time, escrow deposits from litigation customers rose by 9% on a last-quarter annualized (LQA) basis.

Esquire Financial’s management strategy was also recognized for contributing to the bank’s success. The strategy involved shifting the balance sheet away from commercial real estate (CRE) lending towards more liquid securities.

This move was aimed at reducing credit risk and improving asset yields while also moderating asset sensitivity. These strategic decisions have been instrumental in enhancing the bank’s financial stability and growth prospects, an analyst from Keefe said.

Recently, Piper Sandler raised the target on the company from $60 to $61, due to a strong financial outlook while maintaining an Overweight rating based on its robust core return on assets (ROA) and a solid balance sheet as the basis for this adjustment. To be sure, Esquire Financial has consistently performed with a core ROA above 2%, a total capital (TCE) ratio of 12.5%, and a loan-to-deposit ratio of 86%.

The revised stock price target is predicated on updated earnings estimates for the upcoming years. Piper Sandler projectd that Esquire Financial will post earnings per share (EPS) of $4.96 in 2024 and $5.55 in 2025, an increase from previous estimates.

The analyst from Piper Sandler justifies the premium at which Esquire Financial’s stock trades, attributing it to the company’s superior profitability and its niche market position. The new stock price target of $61 implies that the shares will trade at approximately 11 times the firm’s projected 2025 EPS. This is a slight adjustment from the previous valuation methodology that estimated the stock to trade at around 12 times the 2024 EPS estimate.

InvestingPro Insights

Esquire Financial Holdings (NASDAQ:ESQ) has been making headlines with its impressive second-quarter performance and strategic business moves. In light of this, recent data from InvestingPro provides additional insights into the company’s financial health and market position. With a market capitalization of $462.68 million and a P/E ratio of 11.41, Esquire Financial is trading at a valuation that is attractive relative to its earnings. Additionally, the company has demonstrated solid revenue growth of 12.78% over the last twelve months as of Q2 2024, indicating a robust upward trajectory in its financial performance.

Investors should note that Esquire Financial has seen a significant price total return of 28.5% over the past month and 20.63% over the last three months, signaling strong market confidence in the bank’s recent activities and future outlook. Moreover, with a high return on assets of 2.54% for the same period, the company shows efficient use of its assets to generate earnings.

However, it’s important to consider the InvestingPro Tips that suggest caution. Two analysts have revised their earnings downwards for the upcoming period, and the stock is currently trading near its 52-week high, which may indicate it is in overbought territory. Furthermore, the bank’s gross profit margins have been identified as a weakness, which could pose challenges in maintaining profitability.

For those looking to delve deeper into Esquire Financial’s prospects, there are additional InvestingPro Tips available, offering a comprehensive analysis of the company’s performance and future potential. Interested investors can use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, providing access to a wealth of expert financial insights and tips.

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