DA Davidson has reiterated its Neutral rating on Prosperity Bancshares and kept a $76.00 price target as the bank advances toward finalizing multiple acquisitions. The stock is trading at $67.67 and has fallen nearly 10% over the most recent week.
The bank is on track to close two smaller acquisitions in the first quarter and has disclosed its largest purchase to date - the acquisition of Stellar Bancorp for approximately $2.0 billion. Management expects the Stellar Bancorp transaction to be roughly 9% accretive to 2027 earnings per share, producing proforma EPS of about $7.34. Based on that proforma figure, the shares are trading at 9.2 times earnings.
DA Davidson describes that valuation as "very compelling" relative to Prosperity Bancshares' historical price-to-earnings average of 12.7 times. Despite the apparent bargain, the firm is exercising caution because the bank is integrating multiple deals. In total, three acquisitions would increase proforma assets by 42% - a sizable expansion that raises integration complexity.
The analyst callout also flagged potential headwinds tied to acquired loan portfolios. Historical loan run-off from those portfolios could present challenges to sustaining loan growth after the deals close, according to DA Davidson.
On the results front, Prosperity Bancshares reported fourth-quarter 2025 earnings per share of $1.49, beating the consensus expectation of $1.42. Revenue, however, came in at $317.73 million, just below the expected $317.9 million.
Following the Stellar Bancorp announcement, Jefferies adjusted its price target for Prosperity Bancshares from $90.00 to $85.00 while maintaining a Buy rating. The mixed set of analyst moves - a reiterated Neutral with a $76.00 target from DA Davidson and a lowered but still positive target from Jefferies - underscores differing assessments of the bank's near-term integration and growth prospects.
Context and implications
From a valuation and shareholder perspective, the proforma EPS projection and the resulting single-digit earnings multiple point to an attractive entry valuation relative to the bank's historical P/E. From an operational standpoint, the simultaneous execution of multiple transactions introduces integration risk and potential short-term pressure on loan growth if acquired assets experience run-off.
Investors and market participants should weigh the valuation opportunity against execution risk as the bank completes its announced deals and laps through post-acquisition portfolio behavior.