Raymond James has increased its price target on First BanCorp to $26.00 from $25.00 and maintained an Outperform rating on the shares. The change follows what the firm characterized as "strong 4Q25 results driven by continued NIM expansion" at the Puerto Rico-based bank.
In its update, Raymond James said First BanCorp should continue to realize benefits from securities repricing and lower funding costs, both of which support margin improvement. The firm also highlighted the bank's commercial and industrial (C&I) and residential real estate pipelines as underlying contributors to projected loan growth.
Another factor Raymond James emphasized is the company's capital return policy. The analyst noted First BanCorp's 100% capital return as a "material tailwind" for the stock and underlined the bank's 18% return on tangible common equity (ROTCE) as a measure of profitability.
Raymond James additionally pointed to an "attractive macroeconomic backdrop given reshoring investments in Puerto Rico," framing the island's investment environment as supportive of the lender's outlook. On valuation, the firm observed that First BanCorp's shares are trading at 10.2x its 2026 earnings estimate, versus midcap peers at 11.4x.
Analysis
The upgrade to the target price is modest in absolute terms but reflects the analyst view that recent operational trends - notably NIM expansion and lower funding costs - have improved near-term earnings visibility. Loan growth driven by C&I and residential real estate activity is presented as a tangible pipeline that should sustain balance-sheet momentum, while the full capital-return stance is called out as a direct positive for shareholder value.
The valuation differential to midcap peers is highlighted by Raymond James, suggesting the stock currently trades at a discount to comparable companies on a 2026 earnings multiple basis.
What this means for markets
- The update underscores dynamics in regional banking and Puerto Rico's financial ecosystem, with potential implications for lenders exposed to local economic trends.
- Debt and securities markets matter here - securities repricing and funding-cost trends are central to the analyst case.
- Real estate and commercial lending pipelines are important drivers for loan growth and bank earnings.