Stephens has raised the price target on F.N.B. Corporation (NYSE: NYSE:FNB) to $18 from $16, while keeping an Overweight rating on the stock. The adjustment follows F.N.B. Corporation's reported operating earnings per share (EPS) of $0.34, which was just below the consensus estimate of $0.35.
Additionally, the company's core pre-provision net revenue (PPNR) of $181.8 million fell short of the Street's expectations by 1.5% or $0.01, with fourth-quarter guidance projected to be 3.5% below consensus.
The company's net interest margin (NIM) defense was noted as better than anticipated, with a mere one basis point drop and a modest downward guidance for the fourth quarter, providing some defense against potential negative revisions.
However, the elevated non-interest expenses, despite being guided lower quarter-over-quarter, are negatively impacting estimates. Stephens also pointed out that while there is a soft guide for cost-saving initiatives that could provide some upside, they have lowered their EPS estimates for the years 2025 and 2026 by five cents to $1.35 and $1.70, respectively, with related PPNR down by 2%, largely driven by expenses.
Despite these lowered estimates, which are also below Street predictions, Stephens maintains a positive outlook for F.N.B. Corporation into the second half of 2025 and into 2026. The firm expects the company to exhibit an attractive return profile with a return on assets (ROA) of over 1.20%, PPNR growth of over 1.80%, and a return on tangible common equity (ROTCE) of over 15%.
In other recent news, F.N.B. Corporation reported an operating net income of $122 million for the third quarter of 2024. The bank showcased solid growth with total loans increasing by 4.6% to $33.7 billion and total deposits rising by 5.1% to $36.8 billion. A record non-interest income of $90 million was also reported, while the loan-to-deposit ratio improved to 91.7%.
In the face of these recent developments, F.N.B. Corporation expects mid-single-digit growth in loans and deposits for 2024. The company projects non-interest income between $310 million and $320 million for the fourth quarter, with non-interest expenses anticipated to decrease to between $225 million and $235 million.
During the earnings call, the management expressed openness to mergers and acquisitions, focusing on smaller, accretive deals. They also anticipate an increased demand for commercial loans in 2025.
InvestingPro Insights
To complement Stephens' analysis, InvestingPro data offers additional insights into F.N.B. Corporation's financial position. The company's P/E ratio of 13.43 suggests a relatively modest valuation compared to the broader market. This aligns with Stephens' view that the stock may be undervalued, trading at 8.5 times estimated 2026 earnings.
An InvestingPro Tip highlights that F.N.B. has maintained dividend payments for 50 consecutive years, demonstrating a strong commitment to shareholder returns. This is further supported by the current dividend yield of 3.28%, which may attract income-focused investors.
Despite Stephens' lowered EPS estimates, another InvestingPro Tip indicates that analysts predict the company will be profitable this year. This is consistent with the firm's operating income margin of 40.28% for the last twelve months, suggesting robust profitability.
For investors seeking a more comprehensive analysis, InvestingPro offers 6 additional tips for F.N.B. Corporation, providing a deeper understanding of the company's financial health and market position.
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