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D.A. Davidson downgrades Huntington Bancshares as its stock outperforms

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D.A. Davidson downgrades Huntington Bancshares as its stock outperforms

Downgrades

D.A. Davidson analyst Kevin Reevey downgraded Columbus, Ohio-based Huntington Bancshares Inc. due to the company's recent share price performance.

Huntington Bancshares' stock price has increased 22.9% this year, outperforming the Nasdaq Bank index, which is up 17.4%, according to Reevey.

Despite the lowering interest rate environment, the analyst expects the company to continue to deliver revenue growth and expects little impact to its net interest margin because of its "well positioned" balance sheet. Based on the recent increase to its dividend and its plans to repurchase up to $513 million of common stock over the next four quarters, the analyst expects the company to return about 80% of its earnings to shareholders.

He lowered Huntington Bancshares' rating to "neutral" from "buy." His EPS estimates are unchanged at $1.30 for 2019 and $1.38 for 2020. The analyst also maintained his $16 price target.

Reevey is encouraging investors to swap into Cleveland-based KeyCorp given its lower valuation, he said in a statement to S&P Global Market Intelligence.

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Raymond James analyst Michael Rose downgraded Coral Gables, Fla.-based Amerant Bancorp Inc., driven primarily by the lowering interest rate environment.

The challenging interest rate environment could prolong the company's timeline of achieving its 1% return on assets target into 2021, Rose wrote. Additionally, its low-cost international deposit base with mostly Venezuela-based customers could be a headwind to its net interest margin as it replaces those deposits with higher cost domestic deposits. However, Rose still expects modest EPS growth in 2020.

Rose lowered Amerant Bancorp's rating to "market perform" from "outperform." His EPS estimates are $1.20 for 2019 and $1.22 for 2020.

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Sandler O'Neill & Partners analyst Stephen Scouten downgraded Franklin, Tenn.-based Franklin Financial Network Inc. due to the current interest rate environment and beliefs that loan growth may be even slower soon.

The company's shares are up about 21% year-to-date, driven primarily by its balance sheet repositioning and increased buyback activity, Scouten wrote. However, he expects loan growth to slow in the next several quarters due to the lowering interest rate environment.

He lowered the company's rating to "hold" from "buy." His EPS estimates are $2.11 for 2019 and $2.90 for 2020, down from $2.20 and $3.00, respectively. Scouten's price target on the company is $32.