On Friday, DA Davidson adjusted its price target on M&T Bank (NYSE:MTB) shares, increasing it to $185.00 from the previous target of $159.00, while keeping a Neutral stance on the stock.
The revision comes in the wake of the bank's recent quarterly performance, which included a quarter-over-quarter decrease in nonperforming assets (NPAs) and criticized loans.
Additionally, the bank experienced a decline in deposit costs by 3 basis points quarter-over-quarter alongside robust loan growth, although commercial real estate (CRE) faced pressures.
The bank has also announced plans to restart its share buyback program, with a modest $400 million set for the second half of 2024. Expectations are set for this figure to increase in 2025.
DA Davidson has also updated its net interest income (TE) forecast for 2024 to a range of $6.85 billion to $6.90 billion, up from the prior guidance of approximately $6.85 billion. This new estimate includes a roughly $15 million benefit from higher nonaccrual interest recoveries recorded in the second quarter of 2024.
The rest of the bank's financial guidance remains unchanged. The price target increase reflects a target price-to-earnings (P/E) multiple of 11.5 times DA Davidson's 2025 earnings per share (EPS) estimate of $16.17 for M&T Bank.
The firm's decision to maintain a Neutral rating is based solely on the bank's current valuation. The updated price target and financial outlook suggest a positive view of the bank's fiscal health and operational performance.
In other recent news, M&T Bank Corporation has revised its net interest income (NII) forecast for the year, projecting an increase due to potential Federal Reserve policy changes.
In addition, the bank has announced plans to resume share buybacks amounting to $200 million in each of the third and fourth quarters of this year. Despite a positive NII outlook, the bank reported a 4.5% decline in NII for the second quarter, attributed to higher deposit costs.
M&T Bank also plans to redeem all outstanding shares of its Series E Preferred Stock in August, affecting all 350,000 shares currently in circulation. In recent executive movements, Senior Executive Vice President Darren J. King is set to leave the company, with no successor mentioned yet.
Analysts from firms such as Citi, Jefferies, and Piper Sandler have provided updates on the bank, with Citi reaffirming a Buy rating, highlighting the bank's strong capitalization and potential for strategic maneuvers.
Jefferies increased its price target for the bank, emphasizing its ongoing technology investments and organic growth initiatives. Piper Sandler maintained an Overweight rating, adjusting its NII expectations to approximately $6.85 billion.
These recent developments offer insight into M&T Bank's financial strategy and market position. However, investors should note that the bank's performance could be influenced by numerous factors that could cause actual results to differ materially from those anticipated.
InvestingPro Insights
Amidst the backdrop of DA Davidson's updated price target and financial outlook for M&T Bank, real-time data from InvestingPro provides a deeper dive into the bank's fiscal health. M&T Bank currently boasts a market capitalization of $27.93 billion and trades at a P/E ratio of 11.2, indicating a potentially attractive valuation relative to near-term earnings growth, with a PEG ratio of just 0.73 as of the last twelve months ending Q1 2024. Additionally, the bank's price/book ratio stands at a modest 1.11.
InvestingPro Tips highlight the bank's commendable track record of raising its dividend for 7 consecutive years and maintaining dividend payments for an impressive 46 consecutive years. Moreover, M&T Bank has demonstrated strong price performance with a notable return over the last week of 7.84%, and even more impressive returns over the last month and three months, at 14.0% and 17.79% respectively. These metrics, combined with analysts' predictions that the company will remain profitable this year, underscore the bank's robust financial position.
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