Huntington Bancshares (NASDAQ:HBAN) stock gained 2.6% in Wednesday morning trading after UBS upgraded the bank to Buy from Neutral on the thesis that quality and “smart risk” stocks will fare better during this era of shifting macro and political winds.
While UBS generally thinks that Huntington (HBAN) is “fairly defensive,” regional banks are usually considered higher beta, i.e., offer higher returns than the broader market.
UBS analyst Erika Najarian points out positive catalysts specific to HBAN: “Solid acquisitions bearing fruit, market share gains, and smart spending/hiring when peers are more capital preservative sets the company up for more control over their revenue fate in a year where the rate curve will likely be a roller coaster.”
Among other positive factors: Huntington (HBAN) is likely to benefit from the Federal Reserve’s rate pause. “HBAN won’t be immune to deposit mix shift and pricing creep in a pause, but it benefits nicely from delayed cuts — especially as 48% of its loans are floating rate,” the analyst wrote. She estimates a $13B-$15B benefit in fixed-rate loan repricing in 2024.
UBS boosts its 2024 EPS estimate for HBAN to $1.22 from $1.14 and 2025 EPS estimate to $1.40 from $1.30.
Najarian’s Buy rating on HBAN contrasts with the SA Quant rating of Hold and aligns with the average Wall Street rating of Buy.
