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 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 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.