Renewed attention on Stellar Bancorp (STEL) followed a Raymond James analyst reiterating a positive rating and raising their outlook, with the analyst’s past success rate drawing investor interest.

At a share price of US$31.62, Stellar Bancorp has had a fairly steady run recently, with a 1-year total shareholder return of 20.93% contrasting with a modest 2.80% year to date share price return. This suggests momentum that has cooled slightly even as sentiment has picked up around the latest analyst update.

If this kind of analyst driven interest has you looking wider than one regional bank, it could be a useful moment to broaden your search with fast growing stocks with high insider ownership.

With Stellar Bancorp trading near the Raymond James price target and showing solid 1 year returns, the key question now is whether the current valuation leaves additional upside available or if the market is already fully pricing in future growth.

Most Popular Narrative: 10% Overvaluled

The most followed narrative puts Stellar Bancorp's fair value at US$31.60, almost exactly in line with the last close of US$31.62. This keeps the focus squarely on the assumptions underneath that figure.

The share price likely prices in full and timely realization of merger-related synergies from Allegiance and CBTX, with little room for integration setbacks or cost overhang, which could dampen near-term earnings and inflate the expense base if synergies fall short.

Curious what has to happen for this valuation to hold up? Revenue is nudged higher, margins pulled lower, and the future earnings multiple moves into premium territory. The exact mix of those ingredients is what drives that US$31.60 figure.

Result: Fair Value of $31.60 (OVERVALUED)

However, if Texas loan demand stays resilient and recent investments in digital platforms gain traction, earnings and the current analyst narrative could prove too cautious.

Build Your Own Stellar Bancorp Narrative

If you are not fully on board with this view, or simply prefer testing your own assumptions against the data, you can build a custom take in just a few minutes. Start with Do it your way.

A great starting point for your Stellar Bancorp research is our analysis highlighting 1 key reward and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.