On Tuesday, Piper Sandler adjusted its expectations for Bank of Hawaii (NYSE:BOH) shares, raising the price target to $70 from the previous $58, while maintaining a Neutral rating on the stock.
The revision reflects a combination of factors including an improved margin outlook and a higher fee income forecast, alongside a decreased expense outlook for the bank.
The firm's analyst cited a number of changes to the financial model for Bank of Hawaii. These adjustments include a slightly better margin forecast, although this is tempered by a smaller earning asset base, leading to lower net interest income (NII). Additionally, the firm has increased its projections for fee income and reduced its expense expectations for the bank.
The forecast also includes a strategic shift in provision assumptions, moving a portion from the current year into 2025. Despite this alteration, the analyst emphasized that Bank of Hawaii's credit quality is anticipated to remain among the best in the industry. This strong credit outlook has contributed to the firm's decision to adjust its price target.
As a result of these updates, the firm has increased its earnings per share (EPS) estimate for 2024 by $0.03, bringing it to $3.34. However, the EPS estimate for 2025 has been revised downward by $0.05 to $3.38.
The new price target of $70 is based on 20.7 times the firm's 2025 EPS estimate, which is an increase from the previous valuation of 17.5 times the 2024 EPS estimate.
The adjustment in Bank of Hawaii's price target comes in the context of a broader increase in peer multiples, which has influenced the firm's valuation of the bank's shares. The revised target suggests a more optimistic view of the bank's financial trajectory over the coming years.
In other recent news, Bank of Hawaii has undergone a series of financial adjustments. The bank recently announced a $165 million preferred equity raise with an 8% coupon, anticipated to increase its Tier 1 and Total capital ratios.
However, this move is expected to cause a 9% reduction in earnings per share in the first quarter of 2024. Jefferies responded to this development by reducing the price target for Bank of Hawaii shares from $55 to $53, maintaining a Hold rating on the stock.
Simultaneously, Bank of Hawaii's Q1 2024 performance showed stability with a net interest margin improvement and consistent non-interest income of $42.3 million. The bank reported a net income of $36.4 million with earnings per share of $0.87.
Analysts from Keefe, Bruyette & Woods and Piper Sandler have also adjusted their outlooks for the bank. Keefe, Bruyette & Woods raised the stock price target to $58 from $55 due to a miss on margin guidance, while Piper Sandler reduced its price target to $60 from $65, anticipating narrower net interest margins and a reduced size of earning assets.
These recent developments reflect the evolving financial landscape for Bank of Hawaii, with a focus on its net interest income, expense outlook, and analyst ratings.
InvestingPro Insights
Following Piper Sandler's updated outlook on Bank of Hawaii, real-time data from InvestingPro provides additional context to the bank's financial health and performance. The bank's market capitalization stands at $2.71 billion, with a forward P/E ratio of 18.9, indicating investors' expectations of future earnings. Notably, the bank has demonstrated a strong return over the last month, with a 22.0% increase, and over the last three months, with an 18.84% increase, signaling a robust short-term performance.
InvestingPro Tips highlight that, despite weak gross profit margins, Bank of Hawaii has maintained dividend payments for an impressive 53 consecutive years, offering a dividend yield of 4.1%. This consistent dividend payout could be a key factor for income-focused investors. Additionally, analysts predict that the company will remain profitable this year, a sentiment supported by the bank's profitable performance over the last twelve months.
For readers looking to delve deeper into Bank of Hawaii's financial metrics and gain access to exclusive investment tips, InvestingPro offers a comprehensive suite of tools and insights. By using the coupon code PRONEWS24, readers can get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription. There are 6 additional InvestingPro Tips available for Bank of Hawaii, which could further inform investment decisions.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.