On Friday, Piper Sandler updated its stance on Huntington Bancshares (NASDAQ:HBAN), increasing the price target to $15.00 from the previous $14.00. The firm maintained its Underweight rating on the stock despite the adjustment. This change comes as a reflection of the higher peer valuations, now approximately 12 times the estimated 2025 earnings per share (EPS), compared to the roughly 11 times used before.
The adjustment by Piper Sandler follows the third-quarter results and updated outlook provided by Huntington Bancshares. In light of recent financial disclosures, the firm's analysts have made some fine-tuning to their EPS estimates for the coming years. For 2024, the estimated EPS has been slightly increased from $1.19 to $1.20.
Additionally, the firm has adjusted the 2025 EPS forecast, reducing it from $1.31 to $1.28. This revision in the estimates takes into account the latest performance and projections provided by Huntington Bancshares. Alongside these updates, Piper Sandler has also introduced an EPS estimate for 2026, setting it at $1.39.
The new price target of $15.00 is based on the updated valuation multiples of Huntington Bancshares' peers. The firm's decision to maintain the Underweight rating suggests that they still see the stock as less favorable compared to other investment opportunities in the sector, despite acknowledging the bank's potential growth in earnings.
In other recent news, Huntington Bancshares has posted robust results for Q3 2024, with earnings per common share reaching $0.33 and a return on tangible common equity (ROTCE) of 16.2%. The bank reported accelerated loan growth of 3.1% year-over-year and an increase in deposits by $8.3 billion, indicating a solid credit performance. Furthermore, the bank has projected record net interest income by 2025 and anticipates loan growth of 4-5% year-over-year for Q4 2024.
Fee revenues saw a growth of 12%, driven by payments, wealth management, and capital markets. The bank also expanded its branch network into the Carolinas, enhancing its merchant acquiring capabilities. However, a slight decline in net interest margin (NIM) to 2.98% was noted.
Huntington Bancshares' management expressed confidence in sustaining strong loan growth into 2024, particularly in commercial and mortgage services. The bank is focusing on organic earnings and capital growth while maintaining a disciplined approach to financial management.
InvestingPro Insights
Huntington Bancshares (NASDAQ:HBAN) presents a mixed picture according to recent InvestingPro data and tips. The company's P/E ratio of 15.37 and Price to Book ratio of 1.23 suggest a relatively modest valuation compared to some peers in the banking sector. This aligns with Piper Sandler's recent price target increase, which was based on higher peer valuations.
One notable InvestingPro Tip highlights that Huntington has maintained dividend payments for 54 consecutive years, demonstrating a strong commitment to shareholder returns. This consistent dividend history could be particularly attractive to income-focused investors, especially given the current dividend yield of 4.02%.
However, another InvestingPro Tip indicates that the company suffers from weak gross profit margins, which may explain Piper Sandler's decision to maintain an Underweight rating despite raising the price target. This weakness in profitability could be a factor in the analysts' slightly reduced EPS forecast for 2025.
It's worth noting that Huntington has shown strong price performance, with a 59.97% total return over the past year. This aligns with another InvestingPro Tip mentioning the company's high return over the last year, which could interest momentum investors.
For readers seeking a more comprehensive analysis, InvestingPro offers additional tips and insights that could provide a fuller picture of Huntington Bancshares' investment potential.
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