Last Update17 Oct 25Fair value Decreased 3.89%
First Citizens BancShares' analyst price target has been reduced from $2,275 to $2,186.54, as analysts cite incremental headwinds related to a recent large bankruptcy exposure and expectations for moderating profit margins.
Analyst Commentary
Recent analyst updates regarding First Citizens BancShares present a mixed outlook, highlighting both the company’s competitive strengths and several areas of concern that may affect its future valuation and growth prospects.
Bullish Takeaways
- Bullish analysts have raised valuation targets based on strong excess capital and favorable rate positioning, which they believe may drive long-term shareholder value.
- Expectations for continued loan and deposit growth, as well as the potential for increasing net interest margins, were highlighted as positive trends supportive of fundamental performance.
- The bank’s capital strength and disciplined execution are viewed as supportive factors for its elevated price targets and robust financial outlook.
- Some analysts are maintaining Buy or Overweight ratings, confident in First Citizens’ ability to navigate the evolving interest rate landscape and drive future earnings growth.
Bearish Takeaways
- Bearish analysts have reduced price targets, pointing to incremental headwinds from a recent bankruptcy exposure, specifically an $84 million unsecured claim, which could weigh on near-term financial performance.
- Expectations of moderating profit margins are being driven by a projected rate environment that includes multiple rate cuts, introducing approximately a 20 basis point headwind to net interest margins over the coming year.
- There have been downgrades in ratings, with concerns over reduced earnings visibility and heightened uncertainty around asset quality following recent events in the sector.
- Some analysts are trimming forward-looking earnings estimates for fiscal years 2025 and 2026, reflecting caution about both loan performance and broader macroeconomic risks.
What's in the News
- From April 1, 2025 to July 31, 2025, First Citizens BancShares repurchased 486,324 shares, representing 3.63 percent, for $916.12 million. With this, the company has completed the repurchase of 1,603,648 shares, representing 11.52 percent, for $3,192.12 million under the buyback announced on July 25, 2024. (Key Developments)
- First Citizens BancShares, Inc. announced a share repurchase program allowing the company to buy back up to $4,000 million worth of its Class A Common Stock. The program is set to expire in 2026. (Key Developments)
- The Board of Directors of First Citizens BancShares authorized a new buyback plan on July 25, 2025. (Key Developments)
Valuation Changes
- Consensus Analyst Price Target has declined from $2,275 to $2,186.54, reflecting a modest decrease in fair value estimation.
- Discount Rate has increased slightly from 8.64% to 8.68%, signaling a marginally higher required rate of return for investors.
- Revenue Growth projections have risen from 1.68% to 2.32%, suggesting analysts now expect somewhat stronger top-line expansion.
- Net Profit Margin has edged lower from 22.88% to 22.51%, pointing to expectations of slightly compressed profitability ahead.
- Future P/E has dropped from 13.50x to 12.96x, indicating that shares are now valued a bit less richly on a forward earnings basis.
Key Takeaways
- Specialized industry verticals and digital strategies are key to driving growth in commercial segments and deposits, boosting revenue and net interest income.
- Share repurchase programs and strategic financial decisions, reflecting management's confidence, aim to enhance EPS and stabilize or improve net margins.
- Uncertainty and potential rate cuts threaten First Citizens BancShares' earnings, with challenges in credit exposure and specific portfolios risking elevated losses.
Catalysts
About First Citizens BancShares- Operates as the holding company for First-Citizens Bank & Trust Company that provides retail and commercial banking services to individuals, businesses, and professionals in the United States and internationally.
- First Citizens BancShares is focusing on growth in its Commercial Bank and SVB Commercial segments, particularly through specialized industry verticals such as tech, media, and telecom, which are expected to drive future loan growth and, consequently, revenue.
- The company is leveraging its strong balance sheet and liquidity position to continue share repurchase programs, which are expected to improve earnings per share (EPS) significantly by reducing the number of shares outstanding.
- First Citizens anticipates further growth in deposits through its Direct Bank and General Bank, using digital strategies and proactive marketing to attract and retain clients, potentially enhancing net interest income as deposit rates decline.
- Strategic decisions such as terminating the loss share agreement with the FDIC and issuing new debt at attractive terms reflect management’s confidence in asset quality and financial flexibility, potentially stabilizing or improving net margins.
- The company is investing in technology and risk management to support future growth and operational efficiency, likely aiming to optimize operating expenses and improve long-term net margins.
First Citizens BancShares Future Earnings and Revenue Growth
Assumptions
How have these above catalysts been quantified?- Analysts are assuming First Citizens BancShares's revenue will grow by 2.6% annually over the next 3 years.
- Analysts assume that profit margins will shrink from 26.0% today to 22.6% in 3 years time.
- Analysts expect earnings to reach $2.2 billion (and earnings per share of $216.09) by about September 2028, down from $2.3 billion today. However, there is some disagreement amongst the analysts with the more bullish ones expecting earnings as high as $2.5 billion.
- In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 13.4x on those 2028 earnings, up from 10.8x today. This future PE is greater than the current PE for the US Banks industry at 11.9x.
- Analysts expect the number of shares outstanding to decline by 7.0% per year for the next 3 years.
- To value all of this in today's terms, we will use a discount rate of 8.45%, as per the Simply Wall St company report.
First Citizens BancShares Future Earnings Per Share Growth
Risks
What could happen that would invalidate this narrative?- The macroeconomic environment remains uncertain due to factors like tariff announcements and market volatility, making it difficult to predict future impacts on First Citizens BancShares' earnings and growth prospects. This could negatively affect revenue and net margins.
- Lower net interest income guidance due to increased likelihood of rate cuts implies potential pressure on earnings as lower rate environments may squeeze net interest margins.
- The decision to terminate the loss share agreement with the FDIC may increase exposure to potential credit losses from the acquired SVB portfolio, which could impact net earnings if the anticipated credit quality does not hold.
- The company's asset-sensitive balance sheet could face challenges if interest rates are cut multiple times, potentially reducing net interest income, which is core to the bank's revenue model.
- Credit concerns remain around specific portfolios like commercial real estate and investor-dependent sectors, which could see elevated losses and pressure earnings through higher charge-offs.
Valuation
How have all the factors above been brought together to estimate a fair value?- The analysts have a consensus price target of $2310.714 for First Citizens BancShares 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 $2600.0, and the most bearish reporting a price target of just $2050.0.
- In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $9.7 billion, earnings will come to $2.2 billion, and it would be trading on a PE ratio of 13.4x, assuming you use a discount rate of 8.5%.
- Given the current share price of $1945.95, the analyst price target of $2310.71 is 15.8% 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.
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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.
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