On Friday, Truist Securities revised its price target for United Community Banks (NYSE:UCB), reducing it to $30.00 from the previous $32.00. The firm maintained its Hold rating on the company's stock. The adjustment followed the bank's third-quarter results, which prompted Truist to tweak its Core EPS estimates for 2024 and 2025 slightly down and up, respectively, to $2.21 and $2.19 from $2.25 and $2.17.
The analyst's revisions were based on a combination of factors, including an anticipated higher Net Interest Income (NII) and reduced expenses, though these were partly balanced by lower fee income. Truist forecasts that NII will hit its lowest point in the first quarter of 2025, with subsequent expansion as the effects of fixed rate repricing and decreased deposit costs begin to outweigh the impact of floating rate assets.
Credit quality within United Community Banks showed a mixed picture, but Truist noted positive movement, citing the ongoing decrease in Nativas Net Charge-offs (NCOs) to 1.34% of average loans, down from 1.42% in the previous quarter. Despite these changes, Truist suggests that the stock's current valuation is near fair value at 12.8 times the firm's projected 2025 earnings per share (EPS).
The revised price target of $30 reflects a multiple of 13.7 times Truist's estimated EPS for 2025. This adjustment indicates a more conservative outlook on the bank's stock value, considering the softer loan growth forecast for the upcoming period.
In other recent news, United Community Banks has experienced several developments. Following the company's third-quarter results, Truist Securities revised its price target for the bank to $30, maintaining a Hold rating. The firm adjusted its Core EPS estimates for 2024 and 2025 to $2.21 and $2.19, respectively, citing factors such as higher Net Interest Income and reduced expenses.
Piper Sandler also adjusted its outlook on United Community Banks, reducing the price target to $28 while keeping a Neutral rating. The firm's revised earnings estimates are now at $2.20 for 2024 and $2.25 for 2025. The new price target is based on approximately 12.5 times the firm's 2025 earnings estimate, suggesting a floor for the bank's shares.
Further, United Community Banks announced plans to transfer its stock listing from NASDAQ to the New York Stock Exchange, a move anticipated to enhance visibility among investors and stakeholders. The bank reported stable operating earnings per share at $0.52 for the first quarter of 2024, with a modest 1.2% loan growth.
DA Davidson maintained a Buy rating on United Community Banks, raising its price target to $35, based on the bank's strong liquidity position and potential for accelerated loan growth by 2025. The firm's positive outlook is based on the bank's promising growth prospects in revenue and earnings per share for the years 2024 and 2025.
InvestingPro Insights
Adding to Truist Securities' analysis, recent data from InvestingPro provides further context on United Community Banks' (NYSE:UCB) financial position and market performance. The company's market capitalization stands at $3.37 billion, with a price-to-earnings ratio of 18.4, suggesting a moderate valuation relative to earnings.
InvestingPro Tips highlight UCB's commitment to shareholder returns, noting that the company has raised its dividend for 10 consecutive years and maintained dividend payments for 11 years straight. This consistency in dividend policy aligns with the current dividend yield of 3.4%, which may be attractive to income-focused investors in the current market environment.
However, it's worth noting that UCB suffers from weak gross profit margins, which could be a concern in light of Truist's revised earnings estimates. This weakness in margins may explain why 2 analysts have revised their earnings downwards for the upcoming period, as indicated by another InvestingPro Tip.
For investors seeking a more comprehensive analysis, InvestingPro offers 5 additional tips that could provide deeper insights into UCB's financial health and future prospects.
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