Bank of America just raised its EUR/USD forecast
On Friday, Citi analysts revised their outlook on Cullen/Frost Bankers (NYSE: CFR), reducing the price target to $109.00 from the previous $121.00 while maintaining a Sell rating on the stock. Currently trading at $120.34, the stock sits between analysts’ targets ranging from $103 to $164, with InvestingPro data indicating the stock is currently overvalued. The adjustment reflects concerns about the bank’s operational efforts and the impact of its growth strategy on earnings.
Cullen/Frost Bankers, known for its commitment to long-term growth and expansion across Texas, has been actively increasing its branch network. With a market capitalization of $7.7 billion and a strong dividend history - having raised dividends for 32 consecutive years according to InvestingPro - the bank maintains a solid foundation. However, Citi analysts express skepticism about the bank’s operational endeavors, doubting they will meaningfully contribute to earnings before late 2026. The analysts point to the investment expenditures tied to the bank’s growth plan as the primary obstacle to pre-provision net revenue (PPNR) in the near term. They anticipate these costs will start to decrease in 2027.
The bank’s loan growth expectations for 2025 remain unchanged, but the analysts foresee potential challenges. They cite economic uncertainty and an increase in commercial real estate (CRE) payoffs as possible factors that could hinder the bank’s growth trajectory in 2025 and 2026.
The decision to lower the price target by $12 to $109 was attributed to a variety of factors, including a more conservative economic outlook, the bank’s significant asset sensitivity, and the high level of investment spending that could suppress any imminent improvement in PPNR. The revised target price also factors in a higher equity beta, which has influenced the cost of equity (CoE) modeling, leading to a more cautious valuation by Citi.
In other recent news, Cullen/Frost Bankers Inc (NYSE:CFR). reported impressive financial results for the first quarter of 2025. The company exceeded analysts’ expectations with earnings per share (EPS) of $2.30, compared to the projected $2.15, and achieved revenue of $560.41 million, surpassing the forecasted $538.79 million. This performance was driven by growth in loans and deposits, with average loans increasing by 8.8% year-over-year to $20.8 billion. Additionally, the bank’s strategic expansion efforts continue to pay off, as it recently opened its 200th financial center in Austin, Texas.
Cullen/Frost has also been recognized for its consumer banking satisfaction in Texas, maintaining its top position for the 16th consecutive year according to J.D. Power. In terms of future outlook, the bank anticipates further growth, expecting net interest income to rise by 5-7% with loan growth projected in the mid to high single digits. The bank’s management remains cautiously optimistic about sustained performance, despite potential risks such as tariff uncertainties and changes in interest rate policies.
Analyst firms have not reported any recent upgrades or downgrades for Cullen/Frost, but the bank’s strong performance and strategic initiatives appear to have bolstered investor confidence. The company’s leadership has highlighted its commitment to strategic growth and maintaining a strong balance sheet, which they believe positions Cullen/Frost well for continued success in various business environments.
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