Isabella Bank Stock Price Target Lowered to $34 by Piper Sandler
MOUNT PLEASANT, Mich., July 29, 2025 — Piper Sandler has adjusted its price target for Isabella Bank Corporation (OTCQX: ISBA) to $34.00, down from $36.00, while maintaining a Neutral rating on the stock, according to a recent analysis. The downgrade follows Isabella Bank’s third-quarter performance, which showed a mix of positive momentum and challenges, including a potential loss tied to a single customer’s deposit accounts.
The bank’s stock has demonstrated resilience, trading at $27.76 as of today, near its 52-week high of $28.03, with a 22.99% price total return over the past three months and 25.17% over the last six months. Despite this upward trend, Piper Sandler’s revised target reflects concerns over a $1.6 million potential loss due to negative balances in deposit accounts linked to one customer, with total exposure, including loans and lines of credit, amounting to $4.0 million. Isabella Bank remains optimistic about recovering some of these funds, which could mitigate the financial impact.
Piper Sandler noted that Isabella Bank’s third-quarter results included a 3% pre-provision net revenue upside, driven by net interest margin expansion, which is expected to continue. The firm also raised its earnings per share estimates for 2024 to $1.80 and for 2025 to $2.40, reflecting higher net interest income assumptions. For 2026, Piper Sandler set an EPS estimate of $2.70. The new $34.00 price target represents a 12.2x multiple on the 2026 EPS estimate, aligning with industry peers.
Isabella Bank’s financial health remains robust, with a 5.6% dividend yield, significantly above the peer average of 3.2%. The bank recently declared a third-quarter cash dividend of $0.28 per share, underscoring its commitment to shareholder value. However, negative revenue growth of -10.05% over the past twelve months and expectations of a drop in net income this year prompted Piper Sandler to maintain its Neutral stance.
The bank’s management is actively assessing the potential credit losses tied to the affected customer, whose loans are secured by commercial real estate, single-family residential properties, and other assets. Investors are advised to monitor developments regarding the recovery of these funds, as they could influence the stock’s trajectory.
For more detailed insights into Isabella Bank’s valuation and financial outlook, investors can refer to InvestingPro’s comprehensive analysis, which includes additional metrics and projections.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should conduct their own research and consult financial advisors before making investment decisions.