Last Update08 Oct 25Fair value Increased 2.62%
Analysts have raised Popular's fair value estimate from $138.13 to $141.75, citing a strong capital position, improving growth forecasts, and beneficial economic conditions as key factors.
Analyst Commentary
Recent price target increases and ratings upgrades reflect ongoing optimism from the analyst community regarding Popular's financial strength and growth prospects. The following key themes have emerged from the latest rounds of analyst research and commentary:
Bullish Takeaways- Bullish analysts have cited robust capital ratios, including a 16.1% common equity tier 1 ratio. This gives Popular enhanced flexibility to pursue growth opportunities and strategic initiatives.
- Raised price targets point to positive outlooks on the company's ability to execute and deliver value. Notable increases demonstrate confidence in future performance.
- The ongoing benefit from disaster relief spending and favorable U.S. economic dynamics is expected to support continued growth for Popular, especially in its home market.
- Maintained positive ratings underscore conviction in both Popular's earnings power and its capacity to navigate macroeconomic headwinds.
- Some analysts remain cautious, noting that while economic tailwinds support growth, any shift in U.S. policy or slowdown in federal spending could introduce risks to Popular’s outlook.
- Execution risk persists as the bank seeks to expand, particularly if competitive pressures increase or if capital deployment is not timed optimally.
- Higher valuation levels from recent target hikes may limit upside if growth or capital strength expectations are not fully met in coming quarters.
What's in the News
- Popular, Inc. announced a quarterly cash dividend of $0.75 per share, payable on October 1, 2025, to shareholders of record as of September 12, 2025 (Key Developments).
- From April 1 to July 15, 2025, Popular repurchased 1,265,660 shares worth $127.57 million, completing a total repurchase of 4,792,649 shares under a buyback program announced in July 2024 (Key Developments).
- The Board authorized a new share repurchase program on July 16, 2025, allowing up to $500 million in buybacks (Key Developments).
- Popular, Inc. reported net charge-offs of $42.2 million for the quarter ended June 30, 2025, down from $53.6 million a year ago (Key Developments).
- The company increased its quarterly dividend from $0.70 to $0.75 per share, starting in the fourth quarter of 2025, subject to board approval (Key Developments).
Valuation Changes
- Fair Value Estimate has increased from $138.13 to $141.75, reflecting a modest uptick in estimated intrinsic value.
- Discount Rate remains unchanged at 6.78%, indicating a consistent approach to risk and capital cost assumptions.
- Revenue Growth Forecast has risen slightly from 10.53% to 10.66%, suggesting moderate improvement in expected top-line expansion.
- Net Profit Margin projection has edged up from 24.61% to 24.83%, signaling incremental gains in operational efficiency.
- Future P/E Ratio forecast has increased marginally from 10.30x to 10.44x, pointing to somewhat higher valuation expectations based on projected earnings.
Key Takeaways
- Investments in digital platforms and infrastructure modernization are set to improve operational efficiency, customer growth, and long-term revenue expansion.
- Strong regional presence and prudent risk management position Popular to benefit from rising loan demand, financial inclusion, and consistent earnings growth.
- Dependence on Puerto Rico, lagging digital transformation, public sector exposure, rising deposit competition, and regulatory pressures threaten Popular's earnings stability and long-term profitability.
Catalysts
About Popular- Through its subsidiaries, provides various retail, mortgage, and commercial banking products and services in Puerto Rico, the United States, and the British Virgin Islands.
- Ongoing investments in digital infrastructure, including the launch of a new digital platform for commercial cash management and branch modernization, are expected to enhance customer acquisition, retention, and operational efficiency, supporting long-term revenue and margin expansion.
- Increasing financial inclusion and private investment activity in Puerto Rico, combined with a strong regional presence, position Popular to capture above-market deposit and loan growth, directly driving top-line revenue and supporting sustainable earnings growth.
- The continued shift towards electronic payments, as seen in 4% year-over-year growth in credit and debit card sales and targeted enhancements in fee-based services, is likely to boost non-interest income and improve net margins over time.
- Prudent risk management and improved credit quality-evidenced by lower nonperforming loans, charge-offs, and tighter credit standards-are expected to reduce credit losses and stabilize earnings, enhancing future return consistency.
- Federal disaster recovery funds and a strong pipeline of infrastructure projects in Puerto Rico are set to drive sustained commercial loan demand and economic activity, positively impacting loan growth and net interest income for several years.
Popular Future Earnings and Revenue Growth
Assumptions
How have these above catalysts been quantified?- Analysts are assuming Popular's revenue will grow by 10.5% annually over the next 3 years.
- Analysts assume that profit margins will shrink from 25.7% today to 24.7% in 3 years time.
- Analysts expect earnings to reach $930.2 million (and earnings per share of $14.51) by about September 2028, up from $719.7 million today.
- In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 10.2x on those 2028 earnings, down from 11.7x today. This future PE is lower than the current PE for the US Banks industry at 11.9x.
- Analysts expect the number of shares outstanding to decline by 5.22% per year for the next 3 years.
- To value all of this in today's terms, we will use a discount rate of 6.78%, as per the Simply Wall St company report.
Popular Future Earnings Per Share Growth
Risks
What could happen that would invalidate this narrative?- Continued high geographic concentration in Puerto Rico exposes Popular to local economic volatility, demographic shifts (such as net out-migration), and natural disasters, which could negatively impact loan demand, asset quality, and ultimately revenue and earnings stability.
- Slower adoption of digital banking offerings versus global peers, coupled with the nascent stage of their transformation program, increases the risk of losing market share to fintech competitors-potentially pressuring fee income and net margin growth over the long term.
- Elevated exposure to Puerto Rican government and public sector deposits and loans heightens balance sheet risk if there are fiscal or political disruptions, potentially resulting in increased credit losses and lower capital ratios, directly affecting long-term profitability.
- Persistent competition for deposits, especially from yield-seeking retail customers and alternative investment options like stablecoins, could drive up funding costs and compress net interest margins, reducing overall net income and earnings growth.
- Increasing regulatory complexity, particularly around digital innovations, open banking, and anti-money laundering compliance, may elevate operating expenses and slow product innovation, weighing on net margins and dampening long-term earnings potential.
Valuation
How have all the factors above been brought together to estimate a fair value?- The analysts have a consensus price target of $136.875 for Popular based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $155.0, and the most bearish reporting a price target of just $123.0.
- In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $3.8 billion, earnings will come to $930.2 million, and it would be trading on a PE ratio of 10.2x, assuming you use a discount rate of 6.8%.
- Given the current share price of $124.18, the analyst price target of $136.88 is 9.3% higher.
- We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.
How well do narratives help inform your perspective?
Disclaimer
AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.
Read more narratives
There are no other narratives for this company.
View all narratives