Eagle Bancorp (EGBN) PT Lowered at Piper Sandler Amid 'Lingering Concerns'

Piper Sandler analyst Justin Crowley lowered the price target on Eagle Bancorp (NASDAQ: EGBN) to $19.00 (from $22.00) while maintaining a Neutral rating.

The analyst commented: "Office Band-Aid Hopefully Largely Ripped Off, but Still Some Lingering Concerns; Credit noise was certainly not unexpected, and while 3Q's loss far surpassed us and consensus (and more in-line with what we saw last quarter), the driver of this was EGBN acting quicker on addressing stressed office credits through charge-offs/movement into HFS in preparation for further loan disposals. As opposed to a slow bleed and taking charges/loss on office loans as asset disposition strategies are executed, we think it was a positive that the bank engaged an independent credit review firm to help with a lot of that work this quarter. With much still in HFS, much of the actual disposal of these loans still has to be finalized (though management stressed their conservatism on current carrying values) while outside of office, we did find it unfortunate that criticized inflows continued with multi-family largely the culprit.

Thoughts on the stock right now. EGBN shares were down considerably after reporting earnings, and since the print the stock has declined 10.1% vs. the Nasdaq BANK Index +1.5%. As written in our first look (here), we do think you could see some near-term upside in shares following the swift actions within office taken in 3Q and as more distance is created from reporting the large headline loss. That said, and even now at <50% of TBVPS, we find it difficult to get more constructive over the longer term, and remain Neutral. At a time when credit has seemingly come even more under the microscope, it seems to us shares could be range-bound until it becomes clearer that significant further credit losses are less likely. Our updated price target of $19 assumes shares trades toward ~50% of TBVPS (vs. ~55% due to lower peer multiples)."

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