First BanCorp (FBP) is drawing attention after announcing an increased quarterly dividend, moving from $0.18 to $0.23 per share. The dividend boost reflects management’s confidence in the financial outlook and represents a reward for shareholders.

Following the dividend hike and ongoing positive sentiment from brokerages, First BanCorp’s share price has climbed over 17% year-to-date, with a notable 5% total return over the past year. While there has been some short-term volatility, the long-term momentum remains strong. This is highlighted by a 52% three-year total shareholder return and nearly 300% over five years.

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With shares outperforming the market and brokers setting targets above current levels, investors now face the classic question: are First BanCorp’s strong fundamentals and growth prospects fully priced in, or is there still room to buy before the next move?

Most Popular Narrative: 13.9% Undervalued

First BanCorp’s most popular valuation narrative puts fair value at $25 per share, which stands well above its recent close of $21.53. With the fair value estimate comfortably above current market levels, a gap persists that can catch the eye of opportunity-seeking investors.

The bank's aggressive and sustained investment in digital platforms, evidenced by multi-year growth in active digital users and streamlined operations, positions it to capture cost efficiencies and improve net margins as customers shift toward digital channels. Favorable labor market conditions and improving consumer health are reducing credit losses, as seen in lower net charge-offs and stable or improving asset quality metrics. This could support more stable and higher earnings in the future.

Want to see the full story behind the fair value target? Behind these projections are bold assumptions about digital transformation, operational efficiency, and a game-changing profit outlook. The numbers that drive this valuation might surprise you. Discover which critical dynamics are in play and why the market may have some catching up to do.

Result: Fair Value of $25 (UNDERVALUED)

However, the story could change if Puerto Rico’s economy stalls or if slower digital adoption limits the bank’s growth and efficiency gains.

Build Your Own First BanCorp Narrative

If you want to challenge these perspectives or dive deeper into the details yourself, you can craft a personalized view in just a few minutes, and Do it your way

A great starting point for your First BanCorp research is our analysis highlighting 3 key rewards 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.