On Friday, Baird made an adjustment to the price target of Associated Banc-Corp (NYSE:ASB), decreasing it to $25.00 from the previous target of $27.00. Despite this change, the firm maintained a Neutral stance on the stock.
The revision of the price target was prompted by the observation that the core pre-provision net revenue (PPNR) trends were somewhat weaker than expected. Specifically, there was a softer sequential performance in net interest income (NII) and net interest margin (NIM). The actual NIM compression of approximately 4 basis points fell short of the consensus expectation, which had anticipated an expansion of around 5 basis points.
The analyst noted that the NIM trajectory is now set against a lower starting point, which has led to a softer guidance outlook. However, the belief remains that Associated Banc-Corp is still capable of executing its fundamental strategy for loan and deposit growth.
In terms of credit performance and capital levels, the analyst highlighted that these areas are holding up well and are within the targets set by management. Despite the solid fundamentals, the valuation of Associated Banc-Corp is perceived to be full, trading at approximately 1.3 times tangible book value (TBV).
In other recent news, Associated Banc-Corp announced its Q2 earnings with an earnings per share (EPS) of $0.74, which includes a one-time $33 million tax benefit, and an adjusted EPS of $0.52. The company has reported a loan growth of $211 million, mainly driven by commercial and prime/super prime auto loans. Despite a minor decrease in core customer deposits, the bank is positive about deposit growth in the upcoming months.
In terms of strategic developments, Associated Banc-Corp is progressing with its plan focusing on customer growth, profitability, and digital transformation. This strategy has already resulted in improved customer satisfaction and growth in primary checking households. The company anticipates net interest income growth of 1% to 3% for 2024, and loan growth is expected at the lower end of the 4% to 6% range.
While loan growth in Q2 was slower than expected due to softer demand and CRE portfolio payoffs, the bank has hired 10 out of a planned 26 commercial relationship managers to drive future growth. Credit quality remains stable with improvements in delinquencies and criticized loans.
These are the recent developments within Associated Banc-Corp.
InvestingPro Insights
In light of Baird's recent price target adjustment for Associated Banc-Corp (NYSE:ASB), a closer look at real-time metrics and InvestingPro Tips may provide additional context for investors. Associated Banc-Corp has demonstrated commendable consistency by raising its dividend for 12 consecutive years, signaling a potentially stable income stream for investors. Moreover, the company has maintained dividend payments for an impressive 50 years, underscoring its commitment to shareholder returns. On the performance front, ASB has shown a strong return over the last month, with a price total return of 19.65%.
From a valuation perspective, Associated Banc-Corp's market capitalization stands at $3.61 billion, with a price-to-earnings (P/E) ratio of 24.31, mirroring the adjusted P/E for the last twelve months as of Q1 2024. Despite a notable revenue decline of 20.51% during the same period, the company's operating income margin remains robust at 26.56%. Additionally, the stock is trading near its 52-week high, at 98.84% of this threshold, which may indicate investor confidence but also suggests a need for caution regarding entry points.
For investors seeking a more in-depth analysis, there are additional InvestingPro Tips available that delve into aspects such as earnings revisions and profitability predictions. To explore these insights and benefit from a comprehensive investment tool, use coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription. With these resources, investors can make more informed decisions about their investments in Associated Banc-Corp.
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