Baird Now Neutral On Huntington Bancshares Following 30% Surge Since January Lows

Baird has downgraded its rating on shares of Huntington Bancshares Incorporated HBAN from Outperform to Neutral, while maintaining its $12 price target, arguing that the risk/reward profile now seems to be “more balanced.”

In a report issued Thursday, analysts David A. George and Garrett A. Holland explained why they believe the stock is approaching its fair value. As per the note, the experts think that Huntington Bancshares is “a high-quality and well-managed regional bank with better relative growth prospects given solid execution (focus on positive operating leverage, product cross sell), steady investments (retail distribution, commercial lending verticals) and opportunistic acquisitions (FMER).”

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The analysts added that, while they feel comfortable maintaining their positions, they believe short-term upside is now somewhat limited for newcomers, given the ~30 percent appreciation seen since January.

Over the long-term, George and Holland see Huntington well position due to its growing revenue — even in spite of the challenging backdrop, the positive operating leverage and the strategic value of the Firstmerit Corp FMER, expected to close in the third quarter of the year, and be accretive by 2017.

Looking at the banking sector as a whole, Baird would be a seller, as long as the rally goes on without being accompanied by further amelioration in the macro outlook. “Now is not the time to get complacent with bank positioning though as the yield curve continues to flatten and loan growth is potentially near the cycle’s peak,” the report concluded.

Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.