HBAN: Cadence Acquisition Will Expand Southeast Presence And Drive Capital-Markets Ambitions

Analysts have slightly reduced their price target for Huntington Bancshares from $19.75 to $19.70. This reflects updated expectations for modest revenue growth and profit margins following recent merger activity and ongoing strategic expansion.

Analyst Commentary

Recent Street research offers a nuanced outlook on Huntington Bancshares. While many analysts are encouraged by the company's strategic actions and growth prospects, some caution remains around integration risks and expectations for sustained performance after the merger.

Bullish Takeaways

Bullish analysts point to Huntington's continued expansion in Texas and the Southeast as a key driver for future revenue and earnings growth.
There is increasing confidence in management's ability to generate strong operating leverage, supported by robust demand across core and newly acquired markets.
Upward revisions to future earnings estimates and loan growth targets reflect belief in Huntington's disciplined approach to mergers and acquisitions.
The company’s strong credit performance and expectations for positive net interest margin trends reinforce the optimistic valuation outlook.

Bearish Takeaways

Bearish analysts highlight potential execution risk tied to the integration of recently acquired banks, particularly with sizeable all-stock transactions.
Pressures on profit margins and only modest anticipated revenue growth have led to slightly lower price targets in the near term.
Some caution that the benefits of recent merger activity are already reflected in the current share price. This limits further upside unless there is substantial outperformance.
Maintaining above-peer growth and credit quality metrics will be essential to justify continued re-rating and positive momentum in the stock.

What's in the News

Huntington Bancshares has agreed to purchase Cadence Bank for $7.4 billion in stock. The deal is described as an "important next stage" for the company, with ongoing expectations for additional acquisitions (The Wall Street Journal).
The company will acquire certain Janney Montgomery Scott units, including the mergers and acquisitions advisory business and fixed-income sales and trading business, to bolster its capital-markets offerings (Bloomberg).
Huntington Bancshares announced plans to open at least four new branches in Winston-Salem, North Carolina by 2027 as part of a wider Carolinas expansion targeting at least 55 branches across six metro areas (Company statement).
Huntington increased its 2025 earnings guidance, raising projected net interest income to 10% to 11%, citing stronger-than-expected loan growth and improved net interest margins (Company statement).
Launching new family banking features, Huntington now offers dedicated Caregiver and Teen Banking accounts in partnership with True Link, helping families manage financial responsibilities safely (Company statement).

Valuation Changes

Consensus Analyst Price Target: Decreased slightly from $19.75 to $19.70, reflecting more modest expectations for near-term growth.
Discount Rate: Increased marginally from 7.29% to 7.34%, indicating a slightly higher perceived risk or required return.
Revenue Growth: Declined slightly from 25.09% to 25.02%, signaling a minimal downward adjustment in growth forecasts.
Net Profit Margin: Dropped slightly from 32.95% to 32.83%, suggesting a small reduction in anticipated profitability.
Future P/E: Increased fractionally from 7.45x to 7.47x, indicating a minor upward revision in future earnings valuation.

Expansion into high-growth markets and strategic acquisitions are increasing revenue opportunities and supporting sustained earnings growth.
Investments in digital platforms and operational efficiency are driving strong fee income, improved margins, and long-term profitability.
Expansion risks, regional concentration, digital competition, margin pressure, and rising regulatory costs could constrain growth, profitability, and operational efficiency.

Catalysts

About Huntington Bancshares

Operates as the bank holding company for The Huntington National Bank that provides commercial, consumer, and mortgage banking services in the United States.What are the underlying business or industry changes driving this perspective?

The expansion into Texas via the Veritex acquisition, combined with ongoing organic growth in high-population-growth markets (Texas, North Carolina, South Carolina), is set to substantially increase Huntington's addressable market and fee-generating opportunities, likely driving higher revenue and earnings growth as these regions mature.
Investments in digital banking and value-added payments platforms, alongside strong adoption among tech-savvy demographics, have already resulted in double-digit growth in payments and wealth management fees and are expected to continue boosting noninterest income and net margin over the long term.
Continued growth in primary banking relationships and disciplined deposit pricing have enabled robust deposit growth at stable or declining costs, positioning Huntington to protect or expand net interest margin and fund loan growth efficiently, supporting profitability and EPS.
Strong execution in acquiring, retaining, and serving small and medium-sized business customers-including leadership in SBA lending and commercial payments-has driven above-peer loan and fee growth, supporting sustainable top-line expansion as SMEs remain a strategic focus.
Enhanced efficiency through technology investment, process reengineering, and scale from recent acquisitions is delivering positive operating leverage and improving the efficiency ratio trend, providing a tailwind for net margin and long-term earnings power.

Huntington Bancshares Earnings and Revenue Growth

Huntington Bancshares Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Huntington Bancshares's revenue will grow by 7.3% annually over the next 3 years.
Analysts assume that profit margins will shrink from 27.5% today to 26.3% in 3 years time.
Analysts expect earnings to reach $2.3 billion (and earnings per share of $1.66) by about September 2028, up from $2.0 billion today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting $2.8 billion in earnings, and the most bearish expecting $1.9 billion.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 15.1x on those 2028 earnings, up from 13.0x today. This future PE is greater than the current PE for the US Banks industry at 11.9x.
Analysts expect the number of shares outstanding to grow by 0.41% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 7.25%, as per the Simply Wall St company report.

Huntington Bancshares Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Ongoing expansion into Texas and the Carolinas, along with the announced Veritex acquisition, increases integration and overexpansion risks-potential operational challenges, culture clashes, or unanticipated costs could drive up expenses and impact net margin and reported earnings.
Continued heavy geographic and business concentration in the Midwest exposes Huntington to slower household formation and aging demographics, which could hinder organic deposit and loan growth, constraining long-term revenue expansion and balance sheet growth.
Industry-wide digitization and the rapid evolution of fintech challenge traditional banks; if Huntington fails to accelerate digital transformation relative to larger peers or disruptors, it risks losing market share and fee income, putting pressure on revenue and ROE.
Margin compression remains a concern due to persistent low or volatile interest rates; despite current NIM stability, future rate declines or heightened deposit competition could reduce net interest income and profitability.
Rising regulatory scrutiny, potential for increased capital requirements, and escalating compliance costs (including cybersecurity and data privacy) could increase operating expenses and limit Huntington's ability to grow loans, thereby compressing net margins and future earnings.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $19.32 for Huntington Bancshares based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $21.0, and the most bearish reporting a price target of just $15.4.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $8.9 billion, earnings will come to $2.3 billion, and it would be trading on a PE ratio of 15.1x, assuming you use a discount rate of 7.2%.
Given the current share price of $17.64, the analyst price target of $19.32 is 8.7% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

How well do narratives help inform your perspective?

Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

HBAN: Cadence Bank Acquisition Will Drive Southeast and Texas Market Expansion