Downgrades
Piper Sandler analyst R. Scott Siefers downgraded Columbus, Ohio-based Huntington Bancshares Inc. and Marietta, Ohio-based Peoples Bancorp Inc. to "neutral" from "overweight," saying he is being more selective with the arrival of the second half of the year.
Historically discounted valuations and strong yields should provide the companies with support, but Siefers said he does not see the same path to outperformance as he had viewed before.
The analyst lowered his price target for Huntington to $13.50 from $14.00 and for Peoples to $30.00 from $31.00.
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Morgan Stanley analysts downgraded American Express Co. and Capital One Financial Corp. to "equal-weight" from "overweight."
The analysts anticipate a slowdown in consumer spending with inflation taking a bigger share of household disposable income. Out of their coverage, American Express skews highest to high-end consumers, they wrote.
"As a result, we are slowing [American Express] discount revenue growth," the analysts said. "As revenue growth slows down, we expect multiples could also come under some pressure."
Additionally, subprime consumer loan losses will rise faster with inflation remaining high in the second half, the analysts project. A significant portion of Capital One's loan book is exposed to subprime, according to the analysts.
The Morgan Stanley analysts downgraded their price target for American Express to $143 from $223 and for Capital One to $126 from $152.
For American Express, they lowered their 2022 EPS estimate to $9.96 from $10.10 and 2023 forecast to $10.98 from $11.82.
For Capital One, the analysts reduced their 2022 EPS forecast to $20.68 from $21.19 and 2023 estimate to $18 from $19.21.
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Oppenheimer & Co. analyst Dominick Gabriele downgraded Capital One to "perform" from "outperform," saying the company's tangible book value growth is "fairly stagnant" and its upside/downside valuation is "not exciting."
"[W]e believe mounting pressure on the consumer is getting closer to a break point as inflation-adjusted income growth slows, and layoffs are likely to creep higher as employers find it harder to pass through inflation input/funding costs and as margin pressure needs to be offset," Gabriele wrote, adding Capital One customers with low FICO scores were possibly significant stimulus and deferment beneficiaries.
The analyst reduced his 2022 operating EPS estimate to $19.30 from $21.21 and 2023 estimate to $18.50 from $22.47.
Initiations
Piper Sandler analyst Nicholas Cucharale initiated coverage of Oakland, Calif.-based California BanCorp with a rating of "overweight" and a price target of $22.
California BanCorp is a branch-light business bank with an "excellent" core deposit base and "strong" organic growth characteristics, according to Cucharale.
Cucharale established a 2022 operating EPS estimate of $1.83 and a 2023 estimate of $2.18.
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Hovde Group analyst Brett Rabatin initiated coverage of Lafayette, La.-based Home Bancorp Inc. with an "outperform" rating and a $46 price target.
The company's shares are positioned to outperform in the current environment considering a modest valuation and improving core fundamentals coming in the near future following the completion of the acquisition of Texan Bank NA, according to the analyst.
"The growth profile of [Home Bancorp] should continue to improve, and we envision stronger core profitability levels as efficiency gains occur and the [net interest margin] rises," Rabatin wrote.
The analyst established EPS estimates of $3.88 for 2022 and $4.57 for 2023.
