Zinger Key Points
- 1st Source is likely to generate 10% PPNR growth and 1.6% ROA in 2025.
- The stock trading at a discount to peers offers an attractive entry point.
1st Source Corp SRCE appears geared up for better-than-average operating leverage and profitability in 2025, according to Piper Sandler.
The 1st Source Analyst: Analyst Nathan Race upgraded the rating for 1st Source from Neutral to Overweight, while raising the price target from $70.00 to $72.50.
The 1st Source Thesis: The company is likely to generate 10% growth in PPNR (pre-provision net revenue) and 1.6% ROA (return on assets) this year, Race said in the upgrade note.
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"Consistent with mgmt's unchanged MSD growth guidance, we continue to model loans up 5% YoY in 2025/2026," which management aims to fund with core deposits "through the development of additional holistic relationships," the analyst wrote.
Management also indicated that 1st Source would likely “pull back on loan growth” if deposit gathering does not keep pace, Race added.
While the stock is currently trading at a discount to peers, it has been historically traded at a premium. Race considers it an attractive entry point.
Price Action: Shares of 1st Source had risen by 4.24% to $59.97 at the time of publication on Monday.
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