UPDATE: Compass Point Downgrades Huntington Bancshares to Neutral Following 1Q13 Earnings
In a report published Thursday, Compass Point analyst Jason Stewart downgraded the rating on Huntington Bancshares (NASDAQ: HBAN) from Buy to Neutral, but reiterated the $8.00 price target.
In the report, Stewart noted, “Following 1Q13 earnings, we downgrade our rating on the shares of HBAN to Neutral from Buy. Our price target remains unchanged at $8. On a relative value basis, we continue to believe that HBAN shares are an attractive investment in the bank sector. However, incremental uncertainty on the downward trajectory of NCOs, which brings into question reserve releases, and continued pressure on mortgage banking income balance our enthusiasm against the valuation of shares. We continue to expect loan growth opportunities in the auto and home equity loan sectors will be important drivers of overall loan and NII growth. However, C&I lending is expected to remain under intense price pressure and with credit quality approaching normalized levels, we struggle to find a catalyst that will send shares closer to our estimate of fair value. Our $8 price target represents 11x our 2014 EPS estimate and a multiple of 1.1x YE14 our BVPS estimate of $7.36.”
Huntington Bancshares closed on Wednesday at $7.01.
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Tags: Compass Point