Upgrade in Stock Rating#
Raymond James has upgraded First BanCorp (NYSE:FBP) from Outperform to Strong Buy. The firm also increased its price target for the stock from $26.00 to $27.00, reflecting confidence in the company's recent performance.
Strong Financial Results#
The upgrade follows First BanCorp's solid core results for the first quarter of 2026. Key highlights include a strong net interest margin, which is the difference between interest earned on loans and interest paid on deposits, and well-controlled expenses. The bank also showed modest improvements in asset quality, which refers to the health of its loan portfolio, and robust capital returns to shareholders.
Despite a slight decline in consumer demand affecting loan growth, First BanCorp saw a 6% year-over-year increase in loan originations. Business activity in Puerto Rico remains strong, driven by reconstruction efforts, onshoring (bringing jobs back to the U.S.), and increased U.S. military operations in the region.
Profitability and Dividends#
First BanCorp reported a return on assets of 1.9% and a return on tangible common equity of 18.7%, indicating strong profitability. The company also offers a dividend yield of 3.4% and has raised its dividend for eight consecutive years. This consistent dividend growth is a positive sign for investors seeking income.
Market Position and Future Outlook#
The stock is currently trading at a price-to-earnings (P/E) ratio that is lower than its mid-cap peers, despite its strong profitability. Analysts note that the stock is undervalued relative to its near-term earnings growth potential, with a price-to-earnings growth (PEG) ratio of 0.45. Additionally, First BanCorp's Board of Directors has declared a quarterly cash dividend of $0.20 per share, payable on June 12, 2026. Overall, these developments suggest a stable outlook for the Puerto Rico-based bank.