Last Update 01 Nov 25
Fair value Decreased 1.44%Analysts have reduced their price targets for First Citizens BancShares by approximately $150 to $2,155. They cite factors such as resilient but range-bound earnings trends, expected pressure on net interest income from anticipated rate cuts, and specific credit exposures.
Analyst Commentary
Analysts' recent research updates on First Citizens BancShares reflect a balanced view of the company's prospects following the latest quarterly results. While price targets have generally been lowered across multiple firms, their commentary highlights both positive and negative considerations for the bank's valuation and growth trajectory.
Bullish Takeaways- Resilient forward returns are expected, with earnings trends described as steady despite market volatility.
- Solid momentum has been noted in global fund banking loan utilization and deposit inflows. This suggests growth in client relationships and funding stability.
- Recent earnings previews have highlighted fundamental strengths in loan and deposit growth for the bank. Expectations for expanding net interest margins in the near term have also been noted.
- Management has proactively provided guidance on net interest income and credit trends. This offers a measure of confidence amid recent market uncertainty.
- Anticipated interest rate cuts are expected to place ongoing pressure on net interest income, creating near-term headwinds for profitability.
- Recent bankruptcy events, such as First Brands, have resulted in specific credit exposures that could impact earnings. This includes an $84 million unsecured claim.
- Multiple analysts have lowered future earnings projections, with reductions in both FY25 and FY26 EPS estimates. These reflect cautious expectations.
- Some ratings remain neutral or hold, citing range-bound returns and the impact of a flatter rate curve on net interest margins.
What's in the News
- Revised earnings guidance for 2025: net interest income is now expected to range from $6.74 billion to $6.84 billion. This reflects adjustments to the forward interest rate curve and lower projected loan accretion (Key Developments).
- Reported net charge-offs of $234 million (0.65% of average loans) for the third quarter ended September 30, 2025. This represents a significant increase from $119 million in the previous quarter (Key Developments).
- Completed share repurchases totaling 310,492 shares (2.37%) for $611 million from July 1 to September 30, 2025, and 1,766,775 shares (12.79%) for $3.5 billion under the buyback announced in July 2024 (Key Developments).
- Declared a quarterly dividend of $2.10 per share to be paid on December 15, 2025, to shareholders of record as of November 28, 2025 (Key Developments).
Valuation Changes
- Fair Value Estimate: Decreased modestly from $2,186.54 to $2,155.00, reflecting a cautious adjustment in analyst outlooks.
- Discount Rate: Increased slightly from 8.68% to approximately 8.70%, indicating a marginal rise in the perceived risk or required return.
- Revenue Growth: Rose from 2.32% to 2.62%, suggesting improved expectations for the company’s top-line expansion.
- Net Profit Margin: Increased from 22.51% to 23.16%, pointing to optimism about profitability improvements.
- Future P/E Ratio: Declined from 12.96x to 12.43x, reflecting expectations for stronger future earnings or a slightly reduced valuation premium.
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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