Last Update 26 Jan 26
Fair value Decreased 0.69%FBP: Future Share Repurchases And Neutral Rating Will Support Upside Potential
Analysts have adjusted their price target on First BanCorp slightly, trimming fair value from about US$24.17 to US$24.00 as they factor in updated views on revenue growth, profit margins, a modestly lower future P/E multiple and recent neutral-rated coverage.
Analyst Commentary
Bullish Takeaways
- Bullish analysts view the neutral rating as consistent with a stock that is roughly aligned with their assessment of fair value around US$24.00, rather than signaling a clear mispricing.
- They see the modest trim in the target as a fine tuning of revenue and margin assumptions, not a shift in the core long term thesis on the bank's ability to execute.
- Supporters highlight that the updated P/E framework still gives the shares a valuation supported by current earnings power, even with a slightly lower future multiple.
- Some bullish analysts point to the refreshed coverage as a sign that the name remains on the radar for investors who are comfortable with a more measured risk and reward profile.
Bearish Takeaways
- Bearish analysts focus on the neutral stance as a signal that they do not yet see enough upside in earnings or revenue growth to justify a higher target than US$24.00.
- The use of a modestly lower future P/E multiple is viewed as a caution that valuation support could be more limited if execution or growth assumptions are not met.
- They see the small target reduction as a reminder that, at current levels, the shares may already discount a fair portion of the expected fundamental performance.
- More cautious analysts suggest that without clearer evidence of stronger profitability trends, the stock is likely to stay closer to fair value rather than re rate meaningfully higher.
What's in the News
- From July 1, 2025 to November 4, 2025, First BanCorp repurchased 3,580,511 shares, representing 2.23% of its shares for US$73.7 million (Key Developments).
- Across the full authorization announced on July 22, 2024, the company has completed the repurchase of 6,358,809 shares, representing 3.94% of its shares for US$123.78 million (Key Developments).
Valuation Changes
- Fair Value: Trimmed slightly from about US$24.17 to US$24.00 per share, reflecting a small adjustment rather than a major reset.
- Discount Rate: Essentially unchanged, moving fractionally from 6.956% to 6.956%, indicating a stable risk and return hurdle in the model.
- Revenue Growth: Assumed revenue growth ticked up modestly from about 9.02% to roughly 9.16%, which implies a slightly stronger top line outlook within the updated framework.
- Net Profit Margin: Margin assumption moved marginally higher from about 27.96% to roughly 28.08%, which suggests a small improvement in expected earnings efficiency.
- Future P/E: The forward P/E multiple in the model edged lower from about 12.66x to roughly 12.47x, which slightly offsets the higher growth and margin inputs in the updated valuation.
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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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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