Source: Investing Published 07/26/2024, 17:40
On Friday, Baird revised its price target on Associated Banc-Corp (NYSE: ASB) stock, lowering it to $25.00 from the previous target of $27.00. Despite the change, the firm maintained a Neutral stance on the stock.
The price target revision was prompted by the observation that underlying net revenue before provisions (PPNR) trends were somewhat weaker than expected. Specifically, there was weaker-than-expected performance in net interest income (NII) and net interest margin (NIM). The actual contraction in NIM of about 4 basis points came in below expectations of an expansion of about 5 basis points.
The analyst noted that the NIM trajectory has now been set against a lower starting point, resulting in a softer guidance outlook. However, the belief remains that Associated Banc-Corp will still be able to execute on its core strategy of loan and deposit growth.
In terms of credit performance and capital levels, the analyst noted that these areas are holding up well and are within the targets set by management. Despite the strong fundamentals, Associated Banc-Corp is considered fully valued, trading at around 1.3 times tangible book value (TBV).
In other recent news, Associated Banc-Corp reported second-quarter earnings of $0.74 per share, which includes a one-time tax benefit of $33 million, and adjusted earnings per share of $0.52. The company reported loan growth of $211 million, driven primarily by commercial and primary/first-line auto loans. Despite the slight decline in core customer deposits, the bank is optimistic about deposit growth in the coming months.
In terms of strategic developments, Associated Banc-Corp is moving forward with its plan focused on customer growth, profitability and digital transformation. This strategy has already resulted in improved customer satisfaction and growth in core current deposits for households. The company expects net interest income to grow by 1% to 3% for 2024, with loan growth expected at the low end of the 4% to 6% range.
While loan growth in the second quarter was slower than expected due to weak demand and the repayment of the CRE portfolio, the bank has hired 10 of its planned 26 business relationship managers to drive future growth. Credit quality remains stable with improvements in delinquencies and non-performing loans.
These are the latest developments within Associated Banc-Corp.
InvestingPro Insights
In light of Baird’s recent price target adjustment for Associated Banc-Corp (NYSE:ASB), a closer look at real-time metrics and InvestingPro’s tips may provide additional context for investors. Associated Banc-Corp has shown commendable consistency by increasing its dividend for 12 consecutive years, indicating a potentially stable income stream for investors. Furthermore, the company has maintained its dividend payout for an impressive 50 years, underscoring its commitment to shareholder returns. On the performance front, United Arab Bank stock has shown a strong return over the past month, with a total price return of 19.65%. From a valuation perspective, Associated Banc-Corp has a market cap of $3.61 billion, with a price-to-earnings (P/E) ratio of 24.31, which reflects the adjusted price-to-earnings for the past twelve months as of Q1 2024. Despite a notable 20.51% decline in revenue over the same period, the company’s operating income margin remains strong at 26.56%. Additionally, the stock is trading near its 52-week high, at 98.84% of that threshold, which could signal investor confidence, but also suggests the need for caution when it comes to entry points.
