On Thursday, Keefe, Bruyette & Woods (KBW) updated their outlook on Associated Banc-Corp (NYSE:ASB), raising the price target to $29.00 from $28.00, while maintaining a Market Perform rating. The firm's revised price target comes in response to recent strategic financial moves by the company, including an equity offering and a balance sheet restructuring announced the same evening.
KBW notes that these initiatives are expected to enhance the financial foundation of Associated Banc-Corp, projecting an improved return on tangible common equity (ROTCE) for the years 2025 and 2026. The adjustments made by the company are anticipated to bring the ROTCE to just under 12%, which is a 60 basis points increase. Additionally, the common equity tier 1 (CET1) ratio is projected to reach 10%.
The strategic moves, including the equity offering and balance sheet restructuring, are seen as a trade-off, providing long-term benefits at the cost of a tangible book value per share earnback period of five years.
InvestingPro data shows the company maintains a Fair overall financial health score, with particularly strong momentum metrics. Analysts remain optimistic, with six analysts recently revising their earnings estimates upward for the upcoming period. For deeper insights into ASB's financial health and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.
InvestingPro data shows the company maintains a Fair overall financial health score, with particularly strong momentum metrics. Analysts remain optimistic, with six analysts recently revising their earnings estimates upward for the upcoming period. For deeper insights into ASB's financial health and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.
The strategic moves, including the equity offering and balance sheet restructuring, are seen as a trade-off, providing long-term benefits at the cost of a tangible book value per share earnback period of five years.
Despite this, the firm believes that these steps will allow Associated Banc-Corp to concentrate on organic growth initiatives, particularly in commercial and industrial hiring, which should, in turn, yield higher risk-adjusted returns and enhance the company's valuation in the future.
In other recent news, Associated Banc-Corp has experienced several significant developments. The company has announced a balance sheet restructuring, including the sale of a portion of its residential mortgage loan portfolio and a repositioning of the securities portfolio. Furthermore, the company has launched a public offering of 11.5 million shares of its common stock, intending to use the net proceeds for general corporate purposes, including supporting its organic growth and capital generation.
RBC Capital has maintained its Sector Perform rating and $28.00 price target for Associated Banc-Corp. This decision follows the company's restructuring actions, which are expected to lead to a stronger margin and spread revenue run-rate for the company in the future. RBC Capital has revised its earnings per share (EPS) estimates for the coming years, increasing the 2025 estimate from $2.18 to $2.40 and the 2026 estimate from $2.46 to $2.70.
Piper Sandler has adjusted its price target for shares of Associated Banc-Corp, lifting it to $28.00 from the previous $26.00 while maintaining a Neutral rating. The firm believes that the recent capital raise and the latest financial maneuvers should have a positive effect on the company's operating EPS for 2025 and 2026.
Baird has reiterated a Neutral rating on shares of Associated Banc-Corp with a steady price target of $25.00. The firm recognizes the earnings per share (EPS) accretion from Associated Banc-Corp's strategic decisions but expresses concerns over the long-term impact of equity dilution on shareholders.
Lastly, Associated Banc-Corp has reported a diluted earnings per share (EPS) of $0.56 for the third quarter of 2024, a 1% rise in total loans, primarily in the commercial and auto sectors, and a $6 million increase in net interest income to $253 million.
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