StoneX reiterates Buy on First Internet Bancorp stock at $35

StoneX reiterated a Buy rating on First Internet Bancorp with a Street-high $35 price target, implying roughly 24% upside from $28.29, based on a 7.5x forward earnings valuation. The bank's Q2 2026 EPS of $0.27 beat the $0.16 consensus estimate, aided by improved credit costs and net-interest-margin expansion, although revenue of $41.12 million missed the $43.78 million forecast. StoneX's Q3 2026 estimate is also above consensus, supporting a constructive outlook despite the revenue shortfall.

Analysis

INBK’s investable question is not whether a single quarter cleared EPS, but whether credit normalization and NIM expansion can persist simultaneously as its commercial loan book reprices. The earnings-quality concern is that the beat appears credit-cost driven while revenue missed; a lower provision is not a durable earnings engine unless nonaccruals, criticized loans, and charge-offs continue to improve. At roughly 75% of forward tangible book under the cited framework, even modest evidence that normalized ROTCE can clear its cost of equity supports tangible-book accretion and multiple upside, but small-bank liquidity and CRE sensitivity justify a persistent discount.

The new lending-leadership transition is a second-order risk rather than an immediate catalyst: underwriting discipline is most valuable late in a credit cycle, while a push for loan growth could sacrifice the recent credit improvement. Over the next 1-3 months, the principal catalyst is guidance or quarterly disclosure validating core NII growth and stable deposit costs; over 6-18 months, the outcome turns on commercial real-estate losses and the pace of rate cuts. Faster easing is ambiguous: it may relieve borrower stress but compress asset yields before funding costs reset.

Consensus may over-focus on the highest Street target and underweight the revenue shortfall. This is a credible value rerating only if the bank demonstrates that lower provisioning reflects better underlying asset quality rather than reserve release or favorable timing. The absence of a meaningful post-results reaction suggests the market is appropriately waiting for cleaner proof, creating an event-driven opportunity rather than a momentum setup.

Key Decisions for Investors

• Watch-list INBK for a starter long only after the next results show positive core revenue growth, stable-or-lower criticized/classified loans, and no upward reserve build; target a 12-18 month rerating toward 0.9-1.0x tangible book versus downside toward 0.6x if credit weakens.
• For existing INBK exposure, define a thesis stop around a material deterioration in nonperforming assets/charge-offs or a renewed revenue-guide reduction, not the next daily price move; those outcomes would invalidate the margin-and-credit normalization premise.
• Use a relative-value structure rather than a broad regional-bank beta bet: long INBK / short KRE in modest size after credit confirmation, isolating potential idiosyncratic tangible-book rerating while reducing exposure to Fed and regional-bank liquidity shocks.
• Do not treat StoneX’s target as an independent catalyst. Monitor SNEX research updates and compare the next consensus EPS/revenue revisions; a target unchanged while estimates fall would signal valuation support is weakening.