Piper Sandler has adjusted its outlook on National Bank Holdings (NYSE: NYSE:NBHC), increasing the price target to $48 from $44, while maintaining a Neutral rating on the company's stock.
The revision follows the bank's recent quarterly results, which prompted updates to the financial model used by the analyst firm.
The updated model reflects a more robust margin forecast and anticipates a slight decrease in the size of the earning asset base. Despite this reduction, a higher Net Interest Income (NII) is expected.
Additionally, stronger fee income, modestly higher expenses, and slightly lower provisions and charge-offs are projected.
These adjustments have led to an increase in the Earnings Per Share (EPS) estimates for the coming years. For 2024, the EPS estimate has been raised by $0.23 to $3.15, and for 2025, it has been increased by $0.10 to $3.20. Piper Sandler has also introduced an EPS estimate for 2026, setting it at $3.45.
The analyst's commentary sheds light on the rationale behind the updated projections. "Following the quarter, our notable model updates include a stronger margin forecast, a slightly smaller earning asset base (but still, higher NII), higher fee income, modestly higher expenses, and slightly lower provisions and charge-offs.
As a result of our changes and 3Q results, we are increasing our 2024 and 2025 EPS estimates by $0.23 and $0.10, respectively, to $3.15 and $3.20. In addition, we are introducing a 2026 EPS estimate of $3.45, which assumes a relatively stable margin, high-single-digit loan growth, good expense control, and continued excellent credit quality," explained Piper Sandler.
In other recent news, National Bank Holdings reported a strong financial performance in its third quarter, including a significant increase in earnings, net interest income, and non-interest income.
The bank's operational earnings per share (EPS) of $0.86 exceeded Stephens' estimate of $0.73, helped by a 3.3% improvement in net interest income (NII) and an 11 basis points expansion in net interest margin (NIM). Stephens, a financial services firm, subsequently increased the price target for National Bank Holdings shares to $49 from $46, maintaining an Equal Weight rating.
The bank's financial success was partly due to proactive measures to reduce deposit costs in anticipation of the Federal Reserve's meeting in September. The company is also progressing with its 2UniFi platform, which is moving to live testing in November. Stephens sees the platform and the bank's robust loan pipelines as potential upsides for the bank's future growth.
National Bank Holdings reported Q3 earnings of $33.1 million, or $0.86 per diluted share, a 20% annualized increase in net interest income, and non-interest income of $18.4 million. The bank's deposit balances grew by $120 million, and a decrease in nonperforming loan ratio and charge-offs was noted.
Non-interest income for Q4 is projected to be between $16 million and $18 million, with non-interest expenses anticipated to be between $64 million and $66 million.
InvestingPro Insights
To complement Piper Sandler's analysis, recent data from InvestingPro offers additional perspective on National Bank Holdings (NYSE: NBHC). The company's P/E ratio stands at 12.97, suggesting a relatively attractive valuation compared to industry peers. This aligns with the analyst's Neutral rating and increased price target.
InvestingPro Tips highlight that NBHC has raised its dividend for 9 consecutive years, demonstrating a commitment to shareholder returns. This is particularly noteworthy given the current dividend yield of 2.49%. The company's strong dividend history could be appealing to income-focused investors.
Moreover, NBHC's stock has shown impressive performance, with a 62.87% total return over the past year and is currently trading near its 52-week high. This robust price action supports Piper Sandler's decision to raise the price target.
For readers interested in a more comprehensive analysis, InvestingPro offers 11 additional tips for NBHC, providing a deeper dive into the company's financial health and market position.
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