Piper Sandler on Monday raised its price objective for 1st Source (NASDAQ: SRCE) to $83.00, up from $80.00, while retaining an Overweight rating on the regional banking stock. Trading near $66.68 at the time of the note, SRCE shares implied roughly 24% potential upside to the new target.
The research team pointed to 1st Source's robust fourth-quarter performance for 2025 as a key driver of the revision. The bank delivered a 7% upside to pre-provision net revenue (PPNR), a result Piper Sandler attributed in part to stronger-than-anticipated net interest income and expansion of net interest margin - outcomes that ran counter to expectations for margin compression.
Those operating dynamics are consistent with the company’s recent top-line momentum. InvestingPro data cited by the firm shows 1st Source achieved 12.43% revenue growth over the last twelve months.
Analysts at Piper Sandler also flagged return-on-assets as an important valuation lever. They expect 1st Source to sustain an ROA in the 1.7%-1.8% range, a level the firm believes should support price-to-earnings expansion above peers versus the shares' current approximate 1x discount on updated earnings-per-share estimates. InvestingPro metrics referenced in the note report a current ROA of 1.76% and a PEG ratio of 0.52, indicating the stock is trading at a relatively low P/E versus near-term earnings growth.
Reflecting the improved interest income outlook, Piper Sandler raised its EPS estimates for 2026 and 2027 by 3%-4%, taking them to $6.65 and $6.90, respectively. The firm highlighted several qualitative strengths underpinning its view, including expected organic growth of the balance sheet, a track record of cost control, and what it described as a "fortress balance sheet" supported by a 2.3% allowance for credit losses and 13.8% tangible common equity.
Independent of Piper Sandler's note, 1st Source reported record net income for 2025 of $158.28 million, a 19.34% increase from the prior year. The bank's fourth-quarter net income was $41.14 million, a 30.87% rise year-over-year, though that quarterly figure represented a modest 2.73% decline from the third quarter of 2025.
Following the earnings release, Keefe, Bruyette & Woods raised its price target on 1st Source to $72 from $69, citing stronger-than-expected operating earnings of $1.86 per share. That adjustment reflected robust PPNR and lower provision levels. The company also increased its dividend, an action the research notes treat as further evidence of financial strength.
On the corporate leadership front, the bank promoted John Bedient to Chief Operating Officer and Executive Vice President and appointed Lifferth as Chief Administrative Officer. Those moves are part of recent succession changes within the organization.
This coverage combines financial metrics, analyst forecast changes, and recent corporate developments to outline the rationale for Piper Sandler's price-target raise while also noting corroborating adjustments from other firms following 1st Source's strong 2025 results.