On Thursday, Keefe, Bruyette & Woods (KBW) adjusted their financial outlook for Fulton Financial (NASDAQ:FULT) Corporation (NASDAQ: FULT), increasing the stock's price target from $23.00 to $24.00. The firm has maintained its Market Perform rating for the company's shares.
The revision follows Fulton Financial's fourth-quarter performance, which saw an upside in pre-provision net revenue (PPNR) and a positive guide for 2025. This led KBW analysts to elevate their earnings estimates for 2025 and 2026 by 6% and 5%, respectively, aligning them more closely with the consensus for 2026.
Despite these positive trends and Fulton Financial's price-to-earnings (P/E) ratio of 13.04 trading at a mid-single digit discount compared to its peers, the company's shares experienced an unexpected 2% decline on Thursday. This drop stood in contrast to the less severe 1% dip in the broader KBW Regional Banking Index (KRX). InvestingPro data reveals the stock has shown remarkable strength with a 31.67% return over the past year and a 7% gain year-to-date, suggesting strong momentum despite the recent pullback.
The analysts at KBW expressed some surprise at the market's reaction, noting the favorable PPNR trends and the potential for Fulton Financial's return on tangible common equity (ROTCE) to reach approximately 14% in both 2025 and 2026. They attributed the projected improvement in ROTCE to strategic initiatives, including capital allocation and cost-cutting measures, such as those implemented in the FultonFirst strategy.
The firm anticipates that if Fulton Financial successfully executes its outlined strategies for 2025, the stock could narrow the valuation gap with its peers. The Market Perform rating suggests that KBW views Fulton Financial's stock as likely to perform in line with the overall market or sector in the near term. Notably, InvestingPro data highlights the company's impressive 43-year streak of consecutive dividend payments, with a current dividend yield of 3.49%, demonstrating a strong commitment to shareholder returns. For deeper insights into Fulton Financial's valuation and growth prospects, investors can access comprehensive Pro Research Reports available on InvestingPro.
In other recent news, Fulton Financial Corporation reported robust Q4 earnings, surpassing analyst estimates. The company's earnings were bolstered by a strong net interest margin and a decrease in expenses. Fulton posted adjusted earnings per share of $0.48, outperforming the consensus estimate of $0.38, with revenue reaching $319.58 million, which also surpassed expectations of $315.74 million.
The company's net interest margin remained healthy at 3.41% in Q4, albeit a slight decrease from 3.49% in Q3. Non-interest expenses saw a sequential decline of $9.5 million to $216.6 million. Fulton's CEO, Curtis J. Myers, stated that 2024 was a record year for the company, with operating diluted earnings per share of $1.85, reflecting an 8% increase over the prior year.
Despite a minor contraction in Fulton's loan portfolio in Q4, the company's common equity tier 1 capital ratio improved to 10.6% from 10.5% in the previous quarter. In the recent developments, the company incurred $9.6 million in acquisition-related expenses in Q4 due to its purchase of Republic Bank assets earlier in the year. This acquisition is part of Fulton's ongoing strategic and operational progress.
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