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Analyst updates Huntington Bancshares earnings model to reflect lower fee income

EditorRachael Rajan
Published 04/01/2024, 08:27 PM
HBAN
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On Monday, Stephens, a financial services firm, maintained its Equal Weight rating and $15.00 price target for Huntington Bancshares (NASDAQ:HBAN), despite anticipating a dip in fee income for the first quarter of 2024.

The forecast comes after Huntington's management indicated at a March industry event that fee income would reach its lowest point in the first quarter and then increase sequentially throughout the year.

The analyst from Stephens updated the earnings model for Huntington, noting the expected decrease in fee income due to reduced overdraft, leasing, and capital markets revenue in the first quarter. However, the firm's full-year earnings per share (EPS) forecast for 2024 remains unchanged. The projection reflects an approximate 5% growth in fees for the year, with capital markets expected to contribute to half of the fee income growth from the first to the fourth quarter.

For the first quarter of 2024, Stephens has adjusted its Operating EPS estimate for Huntington to $0.28, a slight decrease from the previous $0.29. The reported EPS estimate has also been adjusted to $0.25 to account for an additional FDIC special assessment expense that will affect all banks with uninsured deposits over $5 billion.

Despite the adjustments for the first quarter, Stephens has reiterated its Equal Weight rating on Huntington Bancshares, signaling a neutral stance on the stock. The firm's EPS estimates for 2024 and 2025, along with the price target for the shares, remain unchanged, suggesting that the anticipated dip in fee income is a temporary setback rather than a long-term concern.

InvestingPro Insights

As investors weigh the insights from Stephens on Huntington Bancshares (NASDAQ:HBAN), real-time data from InvestingPro provides additional context. The company holds a market capitalization of $20.21 billion, and a Price/Earnings (P/E) ratio of 11.06, which adjusts slightly to 11.12 when looking at the last twelve months as of Q4 2023. This valuation comes as the company has experienced a revenue decline of 0.16% over the last twelve months. Despite a quarterly revenue drop of 14.8% in Q1 2023, the firm has a solid operating income margin of 39.4% for the same period. Moreover, Huntington's commitment to shareholder returns is evident with a dividend yield of 4.44% as of the latest data, maintaining dividend payments for an impressive 54 consecutive years.

InvestingPro Tips highlight that analysts have recently revised their earnings downwards for the upcoming period, which may reflect the tempered expectations for fee income growth. However, the company's gross profit margins are considered weak, which could be an area of concern for potential investors. On a positive note, HBAN is trading near its 52-week high, with a significant price increase of 37.36% over the last six months, indicating strong market confidence. Analysts remain optimistic about the company's profitability this year, a sentiment that is backed by its performance over the past twelve months. For those interested in a deeper analysis, there are additional InvestingPro Tips available at https://www.investing.com/pro/HBAN. Remember to use coupon code PRONEWS24 to get an extra 10% off a yearly or biyearly Pro and Pro+ subscription.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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