On Tuesday, DA Davidson adjusted its outlook on Huntington Bancshares (NASDAQ:HBAN), currently trading at $17.01, by reducing the price target to $20.50 from the previous $21.50. Despite the price target cut, the firm maintained a Buy rating on the bank's stock.
The revision follows Huntington Bancshares' recent financial performance, which featured robust revenue growth but was slightly offset by increased expenses. Credit costs for the bank remained stable throughout the year. According to InvestingPro data, 5 analysts have recently revised their earnings estimates upward for the upcoming period, suggesting growing confidence in the bank's outlook.
Huntington Bancshares has been gaining momentum in its new expansion markets and specialty lending verticals. These areas contributed to leading loan and deposit growth in the fourth quarter and are expected to continue doing so into 2025.
The bank's strategic moves in these sectors have been a driving force behind its strong performance, reflected in its impressive 39.8% one-year total return. With a market capitalization of $24.73 billion and a solid dividend yield of 3.64%, the bank has maintained dividend payments for an impressive 54 consecutive years.
The bank's expense growth is anticipated to slow down in 2025, with projections suggesting an increase of 3.5% to 4.5%, compared to approximately 5.2% in 2024. This anticipated moderation in expense growth is set to establish a positive operating leverage for the bank. DA Davidson forecasts an operating leverage of 200 basis points for Huntington Bancshares in 2025.
The reduction in the price target to $20.50 is primarily due to a minor adjustment in the earnings per share (EPS) forecast for 2026. DA Davidson has trimmed its EPS estimate by $0.07, setting the new forecast at $1.58.
The firm's analysts believe that, despite the lowered price target, Huntington Bancshares' stock holds a positive outlook, underpinned by the bank's operational advancements and market expansion efforts.
In other recent news, Huntington Bancshares has been the focus of multiple analyst reviews following its strong Q3 2024 results. The bank reported earnings per common share of $0.33 with a return on tangible common equity of 16.2%. The period also saw a year-over-year loan growth of 3.1% and an increase in deposits by $8.3 billion.
Truist Securities initiated coverage on Huntington Bancshares with a Buy rating, highlighting the bank's strategic expansion into Texas and the Carolinas. Evercore ISI and JPMorgan also maintained positive outlooks on the bank, raising their price targets to $20.00. Meanwhile, Citi reaffirmed its Buy rating, citing anticipated benefits from fixed asset repricing and the bank's strategy to manage interest rate impacts.
These are recent developments that are crucial for investors to note. Huntington Bancshares has also been expanding its branch network into the Carolinas and enhancing its merchant acquiring capabilities. However, Piper Sandler held an Underweight rating despite increasing its price target to $15.00.
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