Raymond James Upgrades Origin Bancorp (OBK) to Outperform

Raymond James analyst Mike Rose upgraded Origin Bancorp (NYSE: OBK) from Market Perform to Outperform with a price target of $33.00.

The analyst comments "We are upgrading OBK shares from Market Perform to Outperform and establishing a $33 price target following 3Q23 results that exceeded our forecast and consensus on both a core EPS and PPNR basis. Our upgrade reflects the positive impact to the Origin’s EPS/ profitability trajectory from this quarter’s balance sheet restructuring where it utilized a sizable gain from one of its non-marketable equity securities and utilized the proceeds to sell a portion of its lower-yielding AFS securities (3.08% avg. yield) and subsequently pay down the majority of its FHLB borrowings (5.62% interest cost). Given the positive trade-off where, all else equal, it expects a positive net NIM benefit of ~5-6 bp in 4Q23, it has effectively changed the narrative on the company’s fundamental outlook in a low-risk transaction (1.7 year earnback). In turn, our EPS estimates move higher (detailed below) primarily reflecting an increase in our NII forecasts vs. our prior model. Net-net, we now view risk-reward positively where we believe less of a discount to peers on a P/TBV basis is warranted as it is well-positioned for ongoing growth and improving franchise value from its burgeoning Texas franchise (72% of loans/ 55% of deposits). Moreover, we see its stout capital base (TCE ratio up 92 bp y/y) as providing flexibility in coming years in the form of market expansions, M&A, and share buybacks among the list of potential options."

For an analyst ratings summary and ratings history on Origin Bancorp click here. For more ratings news on Origin Bancorp click here.

Shares of Origin Bancorp closed at $28.79 yesterday.

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