Merchants Bancorp (MBIN – Research Report), the Financial sector company, was revisited by a Wall Street analyst today. Analyst Manan Gosalia from Morgan Stanley maintained a Hold rating on the stock and has a $39.00 price target.
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Manan Gosalia has given his Hold rating due to a combination of factors affecting Merchants Bancorp’s financial performance. The company’s first-quarter earnings per share fell short of both Morgan Stanley’s and consensus estimates, primarily due to lower net interest income and fees. This decline was influenced by a reduction in loan and earning asset balances, with average loans decreasing quarter-over-quarter. Although core deposits showed growth, the average interest-bearing deposits decreased as the bank paid down higher-cost brokered deposits.
Looking ahead, Gosalia anticipates that earning assets will grow as loan growth picks up, brokered deposit balances stabilize, and core deposits continue to expand. However, he remains cautious due to the less favorable loan mix and the elevated interest rates that have delayed borrowers from converting to permanent loans. Additionally, the credit quality showed signs of weakening, with the net charge-off ratio reaching its highest level since the second quarter of 2023. These factors contribute to the Hold rating, as uncertainty may continue to impact loan originations and gain on sale revenues in the near term.
Gosalia covers the Financial sector, focusing on stocks such as Cadence Bank, Comerica, and Huntington Bancshares. According to TipRanks, Gosalia has an average return of 5.8% and a 47.37% success rate on recommended stocks.