Truist raises First BanCorp stock price target on stable outlook By Investing.com

Truist Securities raised First BanCorp’s price target to $26 from $25 and reiterated a Buy rating, applying an 11.5x multiple to revised 2026 EPS. The bank also reported Q1 2026 EPS of $0.57 versus $0.51 expected, an 11.76% earnings surprise, with revenue projected at $258.74 million. Truist cited stable credit, expanding net interest margin, and modest balance sheet growth, with support from Puerto Rico reconstruction spending and onshoring investment.

Analysis

FBP screens as a classic “cheap for a reason, but the reason is improving” situation. The market is still treating it like a slow-growth island bank, yet the combination of reinvestment-driven NIM expansion and stable credit means earnings power can re-rate faster than headline loan growth suggests. The real second-order effect is that a lower-growth balance sheet can actually be a virtue here: with modest asset growth, incremental spread improvement flows disproportionately into EPS and capital return capacity.

The underappreciated driver is macro durability in Puerto Rico rather than idiosyncratic bank execution. Reconstruction spending and onshoring create a medium-duration deposit and lending backdrop that is less rate-sensitive than mainland cyclicals, which can keep credit costs subdued even if U.S. growth slows. That makes FBP more interesting as a defensive regional bank proxy with local growth optionality, not just a valuation play.

The main risk is that the stock may already be starting to discount the good news, so upside likely comes in steps rather than a straight re-rating. A softer loan-growth print can still punish the shares in the near term because bank investors anchor on balance sheet expansion as a proxy for franchise health, even when margin expansion offsets it. If credit remains clean through the next 1-2 quarters, the multiple can drift toward the high end of the peer range; if growth stays muted, the stock likely reverts to a value trap narrative.

Key Decisions for Investors

• Long FBP for a 3-6 month trade; target a move toward 12x forward earnings if margin expansion continues, implying low-double-digit upside with limited downside if credit stays stable.
• Buy FBP on post-earnings weakness rather than strength; the best entry is likely after any dip tied to loan-growth concerns, since the fundamental catalyst is spread expansion over the next 2 quarters.
• Pair trade: long FBP / short a higher-beta regional bank with more loan-growth dependence and weaker margin tailwinds; this isolates the valuation re-rate from the macro bank factor.
• Use a covered call structure on existing FBP longs over the next 1-2 months to monetize elevated optimism while preserving upside into subsequent quarterly results.
• Trim if the stock approaches the revised target range before the next credit update, because the next leg higher requires proof that Puerto Rico demand is translating into real loan growth rather than just better spreads.