On Tuesday, Keefe, Bruyette & Woods updated its outlook on Heartland Financial (NASDAQ: HTLF), increasing the stock price target to $51.00 from the previous $41.00. The firm maintained a Market Perform rating on the stock. The revision follows Heartland Financial's recent earnings report and the announcement of its sale to UMB Financial (NASDAQ:UMBF) Corporation (NASDAQ: UMBF) in a transaction estimated at around $2.0 billion.
The analyst from KBW noted that while Heartland's earnings were impacted by the sale news, the company's core trends remain favorable. Heartland Financial is reportedly making strides in its strategic plan, dubbed HTLF 3.0.
The positive earnings beat this quarter was attributed to a lower provision for credit losses and a more favorable tax rate, though this was somewhat balanced by a decrease in pre-provision net revenue (PPNR). This decrease was due to improved net interest income (NII), reduced fees, and increased expenses.
Heartland Financial experienced a 2% quarter-over-quarter decline in loans, excluding those from Rocky Mountain, and a 7% drop in deposits on a last quarter annualized (LQA) basis. The decrease in deposits was largely due to a reduction in wholesale deposits. Despite these declines, the analyst anticipates a rebound in loan growth. Still, a smaller earnings assets (EA) base is expected to have a dampening effect on future earnings per share (EPS).
Looking forward, the analyst has adjusted expectations, reducing EPS estimates for 2024 and 2025 by 2% and 4%, respectively. Despite the downward revision in earnings estimates, the price target for Heartland Financial has been raised, reflecting an optimistic view of the company's trajectory following its strategic initiatives and recent developments.
InvestingPro Insights
As Heartland Financial (NASDAQ: HTLF) navigates through strategic changes and the recent sale to UMB Financial Corporation, investors are closely monitoring its performance metrics. According to real-time data from InvestingPro, Heartland Financial has a market capitalization of approximately $1.78 billion and a P/E ratio of 21.61.
The company has shown strong price performance with a one-week total return of 14.5% and a six-month total return of 53.1%, indicating robust short-term investor confidence.
From the InvestingPro Tips, it's notable that Heartland Financial has raised its dividend for 9 consecutive years and has maintained dividend payments for 29 consecutive years, suggesting a commitment to shareholder returns. Moreover, analysts predict the company will be profitable this year, with net income expected to grow. This aligns with the positive outlook from Keefe, Bruyette & Woods, despite the recent adjustments to EPS estimates.
For investors seeking a deeper analysis, there are additional InvestingPro Tips available that could provide further insight into Heartland Financial's financial health and market position. To explore these tips and gain a comprehensive understanding of HTLF's investment potential, visit Investing.com/pro/HTLF. Don't forget to use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking even more valuable insights.
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