STEL Should I Buy
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Stellar Bancorp Inc (STEL) does not present a strong buy opportunity at the moment for a beginner investor with a long-term strategy. While the technical indicators are bullish and the financial performance shows modest growth, the lack of significant trading trends, absence of strong proprietary trading signals, and potential uncertainties surrounding the merger with Prosperity Bancshares suggest a cautious approach. Holding the stock or waiting for further clarity on the merger's impact is recommended.
The technical indicators are generally bullish. The MACD is positive and contracting, indicating a potential upward trend. The RSI is neutral at 73.819, and the moving averages (SMA_5 > SMA_20 > SMA_200) confirm a bullish trend. The current price of $39.07 is above the pivot point ($38.508) and nearing the first resistance level ($39.868). However, the stock's candlestick pattern suggests a mixed short-term outlook with a 70% chance of 1.6% gain in the next day but a potential 2.35% drop in the next week.
The pending merger with Prosperity Bancshares is cited as a positive development by analysts, potentially improving the deposit base and accelerating ROTCE. Financial performance in Q4 2025 shows growth in revenue (+0.80% YoY), net income (+3.71% YoY), and EPS (+8.51% YoY).
The ongoing investigation by Halper Sadeh LLC into the merger with Prosperity Bancshares raises potential concerns about shareholder rights and financial interests. Additionally, there are no significant trading trends from hedge funds or insiders, and the lack of recent congress trading data suggests limited influential activity.
In Q4 2025, Stellar Bancorp reported modest growth: Revenue increased by 0.80% YoY to $106.58M, net income rose by 3.71% YoY to $26.15M, and EPS grew by 8.51% YoY to $0.51. Gross margin remained unchanged.
Keefe Bruyette upgraded the stock to 'Outperform' with a price target increase from $33 to $44, citing the pending merger with Prosperity Bancshares as a key driver for improved financial metrics and deposit base strength.
