Raymond James Maintains Positive Outlook on Business First Bancshares

Overview#

Raymond James has reaffirmed its Outperform rating on Business First Bancshares (NASDAQ:BFST) following the company's first-quarter 2026 financial results, which surpassed expectations for core earnings per share and pre-provision net revenue.

Earnings and Forecasts#

Despite the positive earnings surprise, Raymond James has lowered its earnings estimates. This adjustment is mainly due to a reduced outlook for net interest margin and net interest income, as well as lower forecasts for loans and average earning assets. The decline in loan forecasts is attributed to a decrease in core loans during the first quarter, driven by higher paydowns. However, the company maintains its guidance for mid-single-digit loan growth in 2026 and anticipates a rebound in loan growth in the upcoming quarter.

Strategic Benefits#

Raymond James highlighted several factors that could benefit Business First Bancshares, including the recent acquisition of Progressive Bancorp, ongoing capital returns to shareholders, and expected improvements in profitability and efficiency. The firm also pointed out that 35% of the company's loans are in Texas, which adds to its value. Currently, the stock is trading at a price-to-earnings (P/E) ratio of 9.95 and a price/earnings-to-growth (PEG) ratio of 0.47, suggesting that it may be undervalued compared to its peers.

Financial Performance#

In its first-quarter report, Business First Bancshares posted earnings per share (EPS) of $0.73, exceeding the analyst estimate of $0.69, which is a positive surprise of 5.8%. However, the company reported revenue of $89.24 million, falling short of the anticipated $90.99 million. This revenue miss has raised some concerns among investors. Additionally, the company experienced an increase in non-performing assets during the quarter, although net charge-off and past due loan ratios showed improvement. Business First Bancshares expects a significant reduction in non-performing assets in the near future and is comfortable with consensus net charge-off ratio forecasts for 2026 and 2027.

Investors will be closely monitoring any further updates or strategic changes from Business First Bancshares as they navigate these financial challenges.