Truist Securities has reduced its price target for OFG Bancorp to $44.00 from $48.00 and kept a Buy rating on the stock. The shares are trading around $37.15 and have experienced a notable selloff of roughly 10.65% over the past week, according to available market data.
The revision reflects an updated company outlook that includes a lower net interest margin and modestly slower loan growth. Those changes were partly offset by expectations for lower non-interest expenses, but the net effect is expected to pressure estimates in 2026. In addition, market data indicate that three analysts have recently trimmed their earnings forecasts for the coming period.
Specifically, Truist cut its 2026 earnings per share estimate to $4.20 from $4.56, citing the reduced net interest margin as the primary driver of the adjustment. The firm also published its initial 2027 EPS projection of $4.60. On a valuation basis, OFG currently trades at a price-to-earnings ratio of 8.08 with a PEG ratio of 0.95, metrics that Truist notes leave the stock reasonably valued relative to its growth outlook.
The new $44.00 target is derived by applying a 10.5x multiple to the revised 2026 EPS estimate of $4.20. That multiple remains unchanged from Truist's prior valuation framework. Analyst price targets across the coverage group span from $43 to $49, and the company appears slightly undervalued when compared with Fair Value calculations reflected in market consensus data.
OFG shares experienced an 8.5% one-day decline on January 22, a move Truist described as "roughly appropriate" in light of the adjusted outlook. Despite the downgrade to the earnings trajectory, Truist retained its Buy rating and noted that recent price moves have already incorporated the lower EPS expectations, "setting a lower bar to outperform throughout 2026."
Corporate activity has provided some offsetting support. Management has been actively repurchasing shares, and the bank currently yields 3.23% on its dividend while reporting dividend growth of 20% over the last twelve months.
On the fundamentals front, OFG delivered a stronger-than-expected fourth quarter for 2025. The company reported EPS of $1.27 versus a consensus forecast of $1.15, a 10.43% beat. Revenue for the quarter was $185.4 million, slightly above the anticipated $184.17 million.
Market reactions to those results were mixed. Following the earnings release, one notable selloff in the stock prompted Piper Sandler to lower its price target from $45.00 to $43.00 while maintaining a Neutral rating. That firm described the post-earnings decline of about 8% as an "extreme" market reaction, attributing it in part to what it sees as a misreading of seasonality within the company's auto loan portfolio. These divergent responses underline the uneven reception from investors and analysts despite the positive quarterly surprise.
In sum, the updated Truist estimates and the recent analyst movements reflect an environment in which modestly weaker margin assumptions and slower loan growth have tightened near-term earnings visibility for OFG. At the same time, active buybacks, a growing dividend, and better-than-expected quarterly results have complicated the market narrative, producing varied valuations and ratings across the research community.
Clear summary
Truist Securities lowered OFG Bancorp's price target to $44 while retaining a Buy rating after the bank reset expectations for lower net interest margin and slightly slower loan growth. Truist cut its 2026 EPS estimate to $4.20 and introduced a 2027 EPS estimate of $4.60, applying an unchanged 10.5x multiple to the revised 2026 number. OFG recently beat Q4 2025 EPS and revenue estimates, but the stock has seen notable declines and mixed analyst reactions.
Key points
- Truist reduced its 2026 EPS estimate to $4.20 from $4.56 and set a new 2027 EPS of $4.60, basing a $44 price target on a 10.5x multiple to the 2026 number.
- Shares are trading near $37.15 after a roughly 10.65% decline over the past week and an 8.5% drop on January 22 that Truist called "roughly appropriate."
- Despite the revisions, the stock offers a 3.23% dividend yield and management has been buying back shares; valuation metrics show a P/E of 8.08 and a PEG of 0.95.
Sectors impacted
- Banking and regional financials
- Consumer lending, including auto loans
- Equity markets and analyst coverage
Risks and uncertainties
- Lower net interest margin and slower loan growth are expected to reduce 2026 earnings estimates, directly affecting banking sector profitability and valuation.
- Investor reactions to quarterly reports can produce sharp short-term share volatility, as reflected in recent single-day selloffs tied to earnings and guidance interpretation.
- Seasonality misinterpretation in the auto loan portfolio could lead to further market mispricing or analyst divergence, affecting confidence in near-term performance.