On Monday, Citi analyst Benjamin Gerlinger updated Old National Bancorp 's (NASDAQ:ONB) price target, raising it to $27.00 from the previous $22.00, while reiterating a Buy rating on the stock. The bank, currently valued at $7.64 billion, has shown impressive momentum with a 44.69% return over the past six months. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value calculations. The adjustment follows the announcement of ONB's acquisition of Bremer Financial Corporation, a move that is anticipated to significantly enhance profitability in 2025 and 2026.
The acquisition is expected to be completed in the middle of the second quarter of 2025. Trading at a P/E ratio of 13.75 and maintaining a 42-year streak of dividend payments, ONB demonstrates strong financial fundamentals. InvestingPro subscribers can access detailed analysis of ONB's acquisition strategy and comprehensive financial metrics in the Pro Research Report.
Gerlinger highlighted the potential for Old National Bancorp to experience an improvement in its net interest margin (NIM) as a direct result of the acquisition, with an estimated increase of approximately 20 basis points upon the deal's closure. The analyst pointed to the favorable pricing of the deal and the expansion of the core deposit footprint as key factors supporting this outlook.
The analyst further noted that Old National Bancorp's fundamental operations, including stable commercial loan growth and the strategic reduction of costs associated with certificates of deposit and other higher-cost funding, should contribute to a stable NIM leading up to the completion of the Bremer acquisition.
The increase in the price target to $27 reflects a positive view of Old National Bancorp's positioning for continued upside and outperformance through 2025, based on the bank's current valuation. Gerlinger's commentary underscores the belief in the strategic benefits of the Bremer acquisition and its impact on Old National Bancorp's future financial performance.
In other recent news, Old National Bancorp has been the subject of various analysts' notes. Piper Sandler identified the bank as an attractive value proposition, maintaining an Overweight rating, particularly following its recent acquisition of Bremer Financial Corporation. Keefe, Bruyette & Woods also maintained an Outperform rating and increased the price target for Old National Bancorp shares. These are recent developments that reflect a positive outlook for Old National Bancorp.
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