On Friday, Piper Sandler adjusted its price target for Associated Banc-Corp (NYSE:NYSE:ASB) shares, increasing it to $24 from the previous target of $23, while maintaining a Neutral rating on the stock.
This change comes after Associated Banc-Corp reported second-quarter earnings per share (EPS) of $0.74, surpassing both the Piper Sandler estimate of $0.54 and the consensus estimate of $0.52. The firm noted that after removing one-time items, the core EPS would be $0.52.
The revision in the price target reflects an update to Piper Sandler's model, which now forecasts a 2024 estimated EPS of $2.31, up from $2.18, primarily due to the company's second-quarter performance exceeding expectations.
However, the estimate for the second half of 2024 has been slightly reduced by $0.06 per share. Additionally, the firm's 2025 EPS estimate has been adjusted from $2.28 to $2.24.
The report identified a weaker-than-expected quarter as the primary reason for the adjustments, with net interest margin (NIM) and net interest income (NII) shortfalls being the main issues.
The softer NII guidance has led to some pressure on the estimated earnings. Piper Sandler indicated that for the company to meet its yearly targets, an increase in NII in the second half of 2024 will be necessary.
Despite these adjustments, Piper Sandler has chosen to keep its Neutral rating on Associated Banc-Corp shares. The firm also expressed that the stock might face some short-term pressure.
The increase in the price target to $24 is justified by higher peer valuations, which are now approximately 11 times the firm's estimated 2025 EPS, compared to the previous multiple of around 10 times.
In other recent news, Associated Banc-Corp has announced Q2 earnings, with an earnings per share (EPS) of $0.74, supported by a one-time $33 million tax benefit, and an adjusted EPS of $0.52. The company also reported a loan growth of $211 million, primarily driven by commercial and prime/super prime auto loans.
Despite a minor decrease in core customer deposits, the bank remains optimistic about deposit growth in the upcoming months. RBC Capital has raised the price target for Associated Banc-Corp to $25, while Baird has adjusted it to the same value, both firms maintaining their ratings on the stock.
These changes come after the bank's Q2 earnings and are based on the company's financial trends and growth expectations. Associated Banc-Corp is also progressing with its strategic plan focusing on customer growth, profitability, and digital transformation.
The bank has hired 10 out of a planned 26 commercial relationship managers to drive future growth. These are the latest developments within Associated Banc-Corp.
InvestingPro Insights
As Piper Sandler revises its price target for Associated Banc-Corp (NYSE:ASB), investors may find additional context through real-time metrics and insights from InvestingPro. With a market capitalization of $3.61 billion and a Price/Earnings (P/E) ratio of 24.31, the bank's valuation reflects its recent financial performance. Notably, Associated Banc-Corp's P/E ratio aligns with the updated earnings per share (EPS) forecast for the coming year.
InvestingPro Tips highlight the bank's commitment to shareholder returns, having raised its dividend for 12 consecutive years and maintained dividend payments for 50 consecutive years. This consistent return to shareholders is further underscored by a current dividend yield of 3.68%. Additionally, the bank's recent price performance has been strong, with a one-month total return of 19.65%, signaling robust investor confidence.
While some analysts have revised their earnings downwards for the upcoming period, and the company faces challenges with weak gross profit margins, Associated Banc-Corp has been profitable over the last twelve months. Investors seeking a more in-depth analysis of these metrics and additional InvestingPro Tips can find them at Investing.com/pro/ASB. There are further tips available, and for those interested in a comprehensive investment tool, use coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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