Piper Jaffray Cuts Price Target on Oceanfirst Financial (OCFC) as Low Margins Drive 1Q Miss

Piper Jaffray maintained an Overweight rating on OceanFirst Financial (NASDAQ: OCFC), and cut the price target to $22.00 (from $23.00), following the company's 1Q earnings report. OCFC reported operating earnings of $0.32 per share, a penny below consensus. The miss was driven by a lower-than-anticipated margin of 3.32%, down 5 bp from 4Q and lower fee income.

Analyst Matthew Breese commented, "We remain positive on shares of OCFC given the company's improving outlook over the next 12-36 months. With the closing of the Cape acquisition expected to occur in early May, we anticipate the company's ROA will head to 0.98% by the end of 2016 with the majority of cost saves expected to occur in the fourth quarter. While 1Q16 had several disappointing elements including a lower margin, higher than anticipated provision and weaker loan growth, we believe our broader thesis remains intact. We expect the company to trade closer to peer multiples (13x 2017 earnings) as the CBNJ deal is closed, cost saves are extracted and profitability as measured by ROA and ROTCE grinds towards deal targets of a 1.00% ROA and 12.0% ROTCE over the next 12-18 months."

For an analyst ratings summary and ratings history on OceanFirst Financial click here. For more ratings news on OceanFirst Financial click here.

Shares of OceanFirst Financial closed at $18.41 yesterday.

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