Citi reaffirmed its Buy rating on Huntington Bancshares (NASDAQ:HBAN), maintaining a price target of $18.00. The decision follows the company's third-quarter earnings report. Citi has opted to remove the positive catalyst watch that was previously in place. The firm's analysis suggests that market reactions to the bank's fourth-quarter 2024 net interest income (NII) guidance may have been overly cautious due to the absence of an explicit 2025 NII forecast, which contributed to the stock's underperformance.
Citi's perspective hinges on two key factors that are expected to positively influence Huntington's financial performance in the future. Firstly, the firm anticipates benefits from fixed asset repricing, which could enhance the bank's earnings. Secondly, Citi is optimistic about Huntington's strategy to manage interest rate impacts, specifically through executing on a down rate beta strategy. These elements are projected to result in a fourth-quarter 2025 and full-year 2026 NII that surpasses the consensus expectations.
The bank's recent earnings release and subsequent stock movement have been closely watched by investors. Citi's analysis points to a potential undervaluation by the market, given its belief in the bank's strategic financial management and the expected outcomes. The reaffirmation of the Buy rating and the price target suggests confidence in Huntington's ability to navigate the interest rate environment and deliver on its financial objectives.
Investors and market watchers will be keeping an eye on Huntington Bancshares as it works towards meeting the financial projections that Citi has outlined. The bank's efforts to reprice assets and manage interest rate changes will be critical in achieving the anticipated NII figures for the upcoming quarters and into 2026.
Citi's commentary provides a snapshot of the bank's outlook post-earnings report, setting the stage for Huntington's performance in the near to medium term. As the market processes this information, it will be reflected in the bank's stock performance and investor sentiment.
Huntington Bancshares reported strong Q3 2024 results, with earnings per common share of $0.33 and a return on tangible common equity (ROTCE) of 16.2%. The bank also posted an accelerated loan growth of 3.1% year-over-year and an increase in deposits by $8.3 billion, reflecting a solid credit performance. Huntington Bancshares is projecting record net interest income by 2025 and anticipates loan growth of 4-5% year-over-year for Q4 2024.
In terms of analyst updates, Piper Sandler adjusted its price target for Huntington Bancshares to $15.00 from the previous $14.00, maintaining its Underweight rating. The firm's analysts have fine-tuned their earnings per share (EPS) estimates for the upcoming years, slightly increasing the 2024 estimate from $1.19 to $1.20 and reducing the 2025 forecast from $1.31 to $1.28. An EPS estimate for 2026 has also been introduced, set at $1.39.
Fee revenues for Huntington Bancshares grew by 12%, driven by payments, wealth management, and capital markets. The bank expanded its branch network into the Carolinas and enhanced its merchant acquiring capabilities. However, a slight decline in net interest margin (NIM) to 2.98% was noted.
InvestingPro Insights
Complementing Citi's bullish outlook on Huntington Bancshares (NASDAQ:HBAN), recent data from InvestingPro offers additional context for investors. The bank's market capitalization stands at $22.32 billion, with a P/E ratio of 14.97, suggesting a relatively modest valuation compared to some peers. This aligns with Citi's view that the market may be undervaluing HBAN's potential.
InvestingPro Tips highlight that Huntington has maintained dividend payments for an impressive 54 consecutive years, demonstrating a strong commitment to shareholder returns. This consistent dividend history could be particularly attractive to income-focused investors in the current economic climate. Additionally, the company's high return over the last year, with a 1-year price total return of 67.01%, underscores the stock's recent strong performance, which may continue if Citi's projections about future net interest income materialize.
However, it's worth noting that 7 analysts have revised their earnings downwards for the upcoming period, which investors should weigh against Citi's optimistic outlook. For a more comprehensive analysis, InvestingPro offers 13 additional tips that could provide deeper insights into Huntington Bancshares' financial health and future prospects.
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