On Friday, Jefferies updated its outlook on shares of Fulton Financial (NASDAQ:FULT), increasing the price target to $19.00 from the previous $18.00, while maintaining a Hold rating on the stock. The adjustment reflects an analysis of the company's financial prospects and recent performance metrics.
The firm's commentary highlighted that better credit quality is anticipated to benefit Fulton Financial in the next year, but a lower net interest income (NII) and net interest margin (NIM) could potentially impact the following year's performance. Jefferies revised its earnings per share (EPS) forecast for Fulton Financial to $1.60 for the upcoming year and $1.90 for the subsequent year, down from the earlier estimate of $2.00 for the latter period.
The report noted that the NIM was lighter than expected, despite an increase in the overall balance sheet size, leading to a softer NII in the second quarter. This was attributed to higher deposit costs. However, the pressure from these costs is expected to lessen over time. The benefits from securities restructuring, which were significant in the second quarter, will be partially offset by the slower pace of new loan origination.
Furthermore, the analysis indicated that operating expenses are likely to continue at a similar rate for the time being. Cost savings from the acquisition of FRBK, which are projected to be around $60 million annually, and the FultonFirst initiative, are expected to commence in the first quarter of 2025. These strategic moves are anticipated to have a positive effect on the company's financial health moving forward.
In other recent news, Fulton Financial Corporation reported strong second-quarter results, with operating earnings reaching $0.47 per diluted share, exceeding analysts' expectations. The company experienced significant balance sheet growth, with increases in organic loans and deposits, and a notable boost from the Republic transaction. Fulton's net interest margin also improved, contributing to growth in net interest income, non-interest income, and operating net income.
In addition to financial performance, Fulton Financial announced the appointment of Richard Kraemer as Senior Executive Vice President and Chief Financial Officer Designee. Kraemer, who brings extensive experience in commercial banking and corporate finance, is set to assume the CFO role in the fourth quarter of 2024.
Despite challenging market conditions, Fulton Financial's asset quality showed slight improvement, with a decrease in the non-performing loan to loans ratio. The company also provided a positive outlook for 2024, forecasting net interest income between $925 million and $950 million.
These are among the recent developments at Fulton Financial, as the company focuses on integrating Republic and advancing its Fulton First initiative. Analysts from Betsy Chivinski and Curtis Myers noted that the company's bond portfolio and liquidity position are being monitored monthly. They also expect deposit costs to peak by the end of the year and then start to decrease.
InvestingPro Insights
According to recent analysis from InvestingPro, Fulton Financial's (NASDAQ:FULT) stock has experienced a notable decline over the past week. However, the company has a track record of maintaining dividend payments for an impressive 43 consecutive years, a testament to its financial resilience.
Analysts have also revised their earnings upwards for the upcoming period, reflecting optimism about the company's profitability in the near term. In fact, Fulton Financial is expected to remain profitable this year, continuing its positive performance from the last twelve months.
InvestingPro Data shows a market capitalization of $3.28 billion for Fulton Financial, with a Price/Earnings (P/E) ratio of 10.92, which is slightly adjusted to 11.03 on a last twelve months basis as of Q2 2024. The company's revenue growth was 4.71% over the last twelve months leading up to Q2 2024, showcasing steady financial progress. Moreover, despite recent price volatility, the stock's dividend yield stands at an attractive 3.66%, which may catch the eye of income-focused investors.
For those seeking additional insights, InvestingPro offers more tips on Fulton Financial, which can be found at https://www.investing.com/pro/FULT.
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