Piper Sandler assumed coverage on MidWest One Financial Group, Inc. on Wednesday. (NASDAQ:MOFG) with a neutral rating and a price target of $24.00. The company set the price target based on 8.5 times 2025 estimated earnings per share (EPS), noting that this valuation is at a discount compared to 9.1 times its peers' average.
This discount reflects the analyst's view of MidWest One's less favorable earnings outlook over the next two years.
MidWest One, a financial institution headquartered in Iowa City, Iowa, manages $6.4 billion in assets and operates 57 banking offices throughout Iowa, the Twin Cities MSA and Denver, Colorado. The company welcomed industry veteran Chip Reeves as its CEO in late 2022, who has since introduced a strategic plan aimed at achieving financial results comparable to its peers by the end of 2025.
The analyst noted that while the current challenging interest rate environment has pushed back the timeline for achieving these financial goals, MidWest One has made steady progress in executing its strategic goals. The company believes that MidWest One's long-term prospects look promising following the implementation of these initiatives.
Piper Sandler's stance on MidWest One could shift to a more positive outlook with signs of stronger growth in organic core deposits and loans, currently expected to be in the single digits. In addition, the firm suggests that further reallocations of costs to more profitable business areas could also contribute to a more constructive view of the bank's stock.
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