On Monday, Stephens raised the price target for Huntington Bancshares (NASDAQ:HBAN) to $16 from $14, while maintaining an Equal Weight rating on the stock.
This adjustment follows the company's second-quarter earnings of $0.30 per share, which surpassed the consensus estimate by $0.02. The increase in net interest income and positive expense trends were significant factors contributing to the approximately 2.5% pretax pre-provision net revenue (PPNR) beat.
The management of Huntington Bancshares reaffirmed its outlook for the year 2024. The recent quarterly performance is particularly noteworthy given the previous quarter's substantial downward adjustment in net interest income (NII) guidance, which went from approximately +/-2% to a decrease of 1%-4%. Despite this, the company's deposit growth continued to outpace its peers, with an average annualized increase of 7.7%.
The cost of total deposits for Huntington rose by 9 basis points in the second quarter of 2024, which was a slower increase compared to the 15 basis point rise in the previous quarter. The company also experienced quarter-over-quarter growth in net interest income, a trend that is expected to continue into the second half of 2024 and into 2025.
At the end of the quarter, Huntington's adjusted Common Equity Tier 1 (CET1) capital was at 8.6%, and it is anticipated to reach the target of 9% in the future. The report also covered an analysis of quarterly loan and deposit trends, credit quality metrics, and the deposit beta, which measures the sensitivity of deposit costs to changes in interest rates.
Stephens reiterated its Equal Weight rating on HBAN shares, signifying that the stock's expected performance is in line with the average returns of the stocks that the analyst covers. The new price target of $16 reflects the firm's assessment of Huntington's financial results and outlook.
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