HomeStreet (HMST) Stock Forecast & Price Target

HomeStreet Inc. has demonstrated a strong financial performance, highlighted by an increase in loan yields of 6 basis points to 4.71%, contrasting with an 11 basis point rise in total deposit costs to 2.73%. The company's recent strategic partnership with FirstSun Capital Bancorp has led to a notable 38% rebound in its stock price, suggesting growing investor confidence amidst potential improvements in the short-term rate environment. Furthermore, with robust underlying credit quality and expectations of a recovery in net interest margin as multifamily loans are repositioned, HomeStreet maintains an attractive valuation relative to its peers, bolstered by potential for improved loan sale pricing that could mitigate downward pressure on tangible book value.

HomeStreet Inc. has reported a decreasing net interest margin (NIM), which fell by 8 basis points to 1.38%, as rising deposit costs outstrip increases in loan yields, contributing to a 7.4% decline in net interest income quarter-over-quarter. Despite a notable reduction in non-performing assets, earnings forecasts for 2024 and 2025 have been downgraded to -$1.23 and $0.13, respectively, reflecting continued challenges in the banking sector that have intensified since the March crisis. The company's vulnerability is exacerbated by risks such as high deposit betas and potential deposit outflows that could necessitate increased borrowing, alongside a persistently sluggish mortgage market.