Last Update 10 Dec 25
FBP: Share Repurchases Will Support Future Returns Despite Margin Constraints
Analysts have trimmed their price target on First BanCorp to $24.00 from a prior range of $25.00 to $26.00, citing a more constrained outlook for net interest margin expansion and limited upside given the bank's already strong operating performance.
Analyst Commentary
Recent Street research reflects a more balanced stance on First BanCorp, with revised price targets converging around $24.00 and modest adjustments to forward earnings expectations.
Bullish analysts highlight that the bank continues to execute well operationally and see room for continued solid earnings, even with slower net interest margin expansion. Bearish analysts, however, emphasize that the shares already reflect much of this strength, limiting upside from current levels.
Bullish Takeaways
- Bullish analysts maintain favorable ratings, viewing the $24.00 price target as still leaving upside relative to current valuation based on earnings power.
- They see First BanCorp's already strong operating performance as a sign of disciplined execution that can support resilient returns, even if growth moderates.
- The modest reduction in 2026 EPS expectations is framed as a recalibration, not a structural concern, with analysts still expecting solid profit growth over the medium term.
- Stable asset quality and consistent profitability underpin the view that the stock can justify a premium valuation to many regional peers.
Bearish Takeaways
- Bearish analysts argue that a more constrained net interest margin outlook limits earnings acceleration, which may cap the potential for multiple expansion.
- They caution that with First BanCorp already operating at a very high level, there are fewer levers left to drive upside surprises on revenue or efficiency.
- The reset in price targets from the mid $20s to $24.00 is interpreted as a view that the risk or reward profile has normalized, with less room for outperformance versus the sector.
- Concerns that incremental growth will rely more on volume than margin lead to questions about how much further valuation can expand without a stronger macro or rate backdrop.
What's in the News
- The Board of Directors authorizes a new share repurchase plan on October 22, 2025, signaling continued confidence in capital strength and valuation (Key Developments).
- First BanCorp announces a share repurchase program of up to $200 million, with repurchased shares to be held as treasury stock and the program set to run through the fourth quarter of 2026 (Key Developments).
- From July 1, 2025 to November 4, 2025, the company repurchases 3,580,511 shares, or 2.23% of shares outstanding, for $73.7 million, completing a total buyback of 6,358,809 shares, or 3.94%, for $123.78 million under the program announced July 22, 2024 (Key Developments).
Valuation Changes
- Fair Value Estimate is effectively unchanged at approximately $24.17 per share, indicating no material shift in intrinsic valuation.
- Discount Rate edged down slightly from 6.96% to 6.956%, reflecting a marginally lower required return assumption.
- Revenue Growth remains effectively flat at about 9.05%, suggesting no change in long term topline growth expectations.
- Net Profit Margin is virtually unchanged at roughly 27.98%, indicating stable profitability assumptions.
- Future P/E holds steady at about 12.64x, implying no meaningful adjustment to the valuation multiple applied to forward earnings.
Key Takeaways
- Robust loan growth, digital investment, and a healthy labor market are boosting earnings potential and supporting stable asset quality.
- Reinvestment strategies and disciplined capital return policies enhance profitability, protect downside risk, and improve shareholder value.
- Heavy reliance on limited markets, rising regulatory costs, and lagging digital adoption could undermine growth, profitability, and stability amid competition and demographic challenges.
Catalysts
About First BanCorp- Operates as the bank holding company for FirstBank Puerto Rico that provides financial products and services to consumers and commercial customers.
- Puerto Rico's ongoing economic recovery, coupled with strong commercial loan demand and continued federal infrastructure investment, is supporting robust loan growth at First BanCorp; this rising lending activity sets the stage for higher future revenues and earnings.
- The bank's aggressive and sustained investment in digital platforms-evidenced by multi-year growth in active digital users and streamlined operations-positions it to capture cost efficiencies and improve net margins as customers shift toward digital channels.
- Favorable labor market conditions and improving consumer health are reducing credit losses, as seen in lower net charge-offs and stable/non-improving asset quality metrics, which could support more stable and higher earnings in the future.
- The ability to reinvest large volumes of maturing lower-yield securities into higher-yielding assets over the next 12 months is expected to drive incremental improvements to net interest margin, directly benefiting both revenue and net income.
- A disciplined capital return policy including buybacks and dividends, combined with a strengthening tangible capital base, provides downside protection and has the potential to enhance EPS and tangible book value per share.
First BanCorp Future Earnings and Revenue Growth
Assumptions
How have these above catalysts been quantified?- Analysts are assuming First BanCorp's revenue will grow by 10.2% annually over the next 3 years.
- Analysts assume that profit margins will shrink from 34.4% today to 29.3% in 3 years time.
- Analysts expect earnings to reach $349.9 million (and earnings per share of $2.37) by about September 2028, up from $306.7 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 13.0x on those 2028 earnings, up from 11.3x 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 2.1% 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.
First BanCorp Future Earnings Per Share Growth
Risks
What could happen that would invalidate this narrative?- Persistent demographic stagnation or decline in Puerto Rico and the Caribbean could shrink First BanCorp's core customer base, potentially slowing loan and deposit growth and leading to lower long-term revenue.
- Limited geographic diversification leaves First BanCorp disproportionately exposed to localized economic shocks, natural disasters, or changes in government funding priorities in Puerto Rico and Florida, introducing the risk of volatile earnings and revenue disruption.
- Heightened competition for commercial deposits, particularly from high-yield seeking customers in a "higher for longer" interest rate environment, could increase funding costs or pressure net interest margins, making it harder to sustain current profitability levels.
- Ongoing need for significant investment in technology and digital transformation, combined with slower adoption of digital banking services relative to larger mainland competitors, may strain expense management and limit the company's ability to generate new sources of fee-based revenue, negatively impacting long-term margins and earnings growth.
- Intensifying regulatory requirements and compliance costs-especially related to anti-money laundering and cybersecurity-could erode operational efficiency and profitability, making it more challenging for First BanCorp to maintain its current efficiency ratio and earnings trajectory.
Valuation
How have all the factors above been brought together to estimate a fair value?- The analysts have a consensus price target of $25.0 for First BanCorp based on their expectations of its future earnings growth, profit margins and other risk factors.
- In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $1.2 billion, earnings will come to $349.9 million, and it would be trading on a PE ratio of 13.0x, assuming you use a discount rate of 6.8%.
- Given the current share price of $21.75, the analyst price target of $25.0 is 13.0% 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.