On Wednesday, Citi made a bullish move on Hancock Whitney (NASDAQ:HWC), upgrading the stock from Neutral to Buy and raising the price target to $50 from the previous $48. The adjustment comes as the analyst believes the market has undervalued the bank's stock, considering the regional banking sector's credit outlook too negatively.
Citi highlighted several factors supporting the upgrade, including Hancock Whitney's strong capital position and favorable deposit pricing trends. These elements are expected to help realign the bank's valuation multiples with market expectations. Despite a recent increase in criticized loans, the bank's robust reserve levels and detailed explanation of credit trends are anticipated to alleviate most concerns.
The analyst's outlook for Hancock Whitney includes an increase in earnings estimates for 2024 and 2025. The bank's return on tangible common equity (ROTCE) is projected to reach 14.5% in the coming years, which is conservative compared to the management's ambitious 18% ROTCE target set for the end of 2026.
The revised price target reflects a $2 increase and is backed by a belief that the bank's risk/reward profile is currently very favorable. This reassessment by Citi suggests confidence in Hancock Whitney's future financial performance and its potential for stock price appreciation.
InvestingPro Insights
In light of Citi's upbeat assessment of Hancock Whitney (NASDAQ:HWC), it's worthwhile to consider additional insights from InvestingPro. With a market capitalization of $3.63 billion and a P/E ratio of 9.33 based on the last twelve months as of Q4 2023, the bank appears to be valued attractively relative to its earnings. Notably, the bank's commitment to shareholder returns is evident as it has maintained dividend payments for an impressive 37 consecutive years, with a current dividend yield of 2.7%.
InvestingPro Tips highlight that Hancock Whitney has a high shareholder yield and has been profitable over the past twelve months. However, three analysts have revised their earnings downwards for the upcoming period, which may be a point of concern for potential investors. The bank's gross profit margins have been identified as a weak spot, yet analysts remain optimistic about the company's profitability for this year.
For those looking to delve deeper into the financial health and prospects of Hancock Whitney, additional InvestingPro Tips are available. These tips provide nuanced perspectives that could further inform investment decisions. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, granting access to a wealth of knowledge including more than 5 additional InvestingPro Tips for Hancock Whitney.
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