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Huntington shares hold as Stephens sets Equal Weight rating

EditorAhmed Abdulazez Abdulkadir
Published 10/06/2024, 17:10

On Monday, Stephens maintained an Equal Weight rating and a $15.00 price target for Huntington Bancshares (NASDAQ:HBAN). The firm's assessment followed a financial update from Huntington's CFO at an industry conference, where several strategic investments were addressed.

The bank has revised its 2024 loan growth forecast downward, attributing the change to a rise in commercial real estate loan pay-downs. Additionally, Huntington has increased its deposit cost outlook in anticipation of higher funding costs required to pre-fund future loan growth.

Huntington Bancshares is set to launch two new deposit verticals in 2024: a mortgage servicing deposit vertical and a homeowners' association (HOA), title/escrow deposit vertical. Each is projected to yield $5 billion in deposits over the medium term. Further, the bank plans to internalize its merchant acquiring services in the second half of 2024, a move that is expected to result in $10 million in related expenses during that period. This internalization aims to better integrate these services with Huntington's core commercial offerings.

The bank has also updated its 2024 net interest income (NII) guidance, now anticipating a decrease of 1%-4%, revised from the previous forecast of around a 2% change. This adjustment is due to the anticipated softer loan growth combined with the increased funding costs. Despite these changes, the fee and expense outlooks for Huntington remain unaltered.

The updated 2024 outlook, which has been adjusted to reflect the results from the first quarter of 2024, suggests that pre-provision net revenue (PPNR) for the second to fourth quarters of 2024 could be approximately 3% lower than the consensus estimates, based on the mid-point figures provided. This maintains the Equal Weight rating previously set by Stephens.

In other recent news, Huntington Bancshares has been in the spotlight due to significant developments in its financial performance and strategic growth initiatives. The company reported notable loan and deposit growth during its first quarter earnings call, and expects an acceleration in loan growth, net interest income, and earnings expansion for 2024 and 2025. Despite a slight decline in non-interest-bearing deposits, the overall credit quality remains stable.

Among other developments, JPMorgan (NYSE:JPM) has upgraded Huntington Bancshares from Neutral to Overweight, and raised its price target to $18.00, reflecting confidence in the bank's growth potential. The firm's bullish stance on the bank is further evidenced by including Huntington Bancshares in its "Magnificent 7" picks.

In terms of leadership changes, the company announced the appointment of Angie Klett as President of Huntington Insurance, Inc., following the retirement of Mary Beth Sullivan. Klett's role will be to expand Huntington's insurance division, leveraging her extensive experience in corporate development at Nationwide Insurance.

InvestingPro Insights

The latest financial outlook for Huntington Bancshares (NASDAQ:HBAN) has prompted Stephens to maintain an Equal Weight rating with a price target of $15.00. Delving into the company's fundamentals, Huntington Bancshares exhibits a stable P/E ratio, currently standing at 11.15, reflecting a valuation that aligns with industry standards. The bank's commitment to shareholder returns is demonstrated by its impressive track record of maintaining dividend payments for 54 consecutive years, a testament to its financial resilience and strategic planning.

An important highlight from the InvestingPro data is the bank's robust operating income margin over the last twelve months as of Q1 2024, which is at a solid 36.92%. This indicates efficient management and profitability that could reassure investors about the bank's ability to navigate through the revised forecasts and strategic investments discussed. Moreover, the dividend yield as of mid-2024 stands at a compelling 4.63%, potentially offering an attractive income stream for dividend-focused investors.

For those considering a deeper analysis, there are additional InvestingPro Tips available that further evaluate Huntington Bancshares' financial health and market position. By using the coupon code PRONEWS24, readers can access these insights with an additional 10% off a yearly or biyearly Pro and Pro+ subscription, providing a more comprehensive investment perspective. With analysts predicting profitability for the year and a history of consistent dividends, investors may find Huntington Bancshares an interesting case study in balancing strategic growth initiatives with financial stability.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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