On Wednesday, Piper Sandler adjusted its outlook on Hancock Whitney Corporation (NASDAQ:HWC), reducing the price target from $55.00 to $52.00 while maintaining an Overweight rating on the stock. The revision comes after the company's first-quarter average earning assets (AEAs) were reported to be approximately $0.9 billion less than Piper Sandler's estimate.
The firm noted that while the net interest margin (NIM) is expected to improve, the impact of a smaller balance sheet in the first quarter has led to a revised earnings estimate for 2025, now set at $4.90, down from the previous $5.10.
Additionally, guidance from Hancock Whitney remained largely the same, with some clarification on the potential trajectory of pre-provision net revenue (PPNR) depending on Federal Reserve rate cuts. PPNR is anticipated to decrease by 1-2% in 2024 if three rate cuts occur, and by 2-3% if no rate cuts are made.
The analyst highlighted positive aspects from the company's call, specifically the growth in noninterest-bearing deposit accounts (NIBDs) and the potential acceleration of the stock buyback program.
NIBDs are expected to reach approximately 35% of deposits by the end of 2024, up from the previous estimate of around 33%. Hancock Whitney also signaled that it may increase its buyback activity as early as the second quarter of 2024.
Despite the normalization of credit conditions, Piper Sandler believes that the current valuation of Hancock Whitney's shares already reflects these changes. The Overweight rating is reiterated, with the price target now set at $52, based on approximately 11 times Piper Sandler's 2025 earnings estimate.
InvestingPro Insights
As we delve into the financial health and performance of Hancock Whitney Corporation (NASDAQ:HWC), certain metrics and insights from InvestingPro reveal a nuanced picture. With a market capitalization of $3.63 billion and a P/E ratio sitting at 9.3, the company presents an interesting valuation standpoint. The adjusted P/E ratio aligns closely at 9.33, indicating a consistent market view on earnings.
InvestingPro Tips highlight that Hancock Whitney has a notable history of maintaining dividend payments, with a streak of 37 consecutive years, which may appeal to income-focused investors. This is complemented by a dividend yield of 2.7% as of the latest data, showing the company's commitment to returning value to shareholders. Additionally, analysts predict the company will remain profitable this year, which is supported by the profitability over the last twelve months, showcasing the company's financial resilience.
However, not all signals are positive. Analysts have revised their earnings downwards for the upcoming period, and the company suffers from weak gross profit margins. These factors may be of concern to potential investors, especially those looking for strong near-term growth prospects.
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