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Wednesday, Citi analysts, led by Benjamin Gerlinger, revised the price target for Old National Bancorp (NASDAQ:ONB) shares to $28 from the previous $28, while retaining a Buy rating on the stock. Currently trading at $19.93, the bank’s shares sit between their 52-week range of $15.60 to $24.49. The adjustment comes despite the bank’s strong first quarter earnings in 2025 and the advancement of a significant deal closure.
Old National Bancorp, which was previously highlighted by Citi as a top pick for 2025 due to its robust profitability outlook, is expected to see further earnings per share (EPS) revisions in the second half of 2025. With a market capitalization of $6.36 billion and a P/E ratio of 11.6x, the bank shows promising fundamentals. According to InvestingPro data, analysts project the company will remain profitable this year. This anticipation is supported by a loan portfolio that is larger than initially guided, following the deal’s expected completion on May 1st, moved up from July 1st.
The bank’s unique operational position, influenced by its pending transaction and related loan sale, is believed to warrant at least a peer-like multiple. This is in the context of an industry where overall lending activity has been relatively weak.
The reduction in the price target to $28 is attributed solely to the constrained economic outlook and an elevated beta factor, which impacts the cost of equity (CoE) valuation model used by Citi. Despite this, the bank’s solid first-quarter performance and the advanced timeline for its deal completion have kept the Buy rating intact.
In other recent news, Old National Bancorp reported its first-quarter 2025 earnings, surpassing analysts’ expectations with an adjusted earnings per share (EPS) of $0.45, compared to the forecasted $0.43. The company’s revenue also exceeded projections, reaching $481.44 million against an anticipated $478.31 million. Old National Bancorp is preparing to finalize its merger with Bremer Bank, expected to close on May 1, which is anticipated to enhance its market presence in the Upper Midwest. Analysts have noted the company’s strong capital position with a CET1 ratio of 11.62%, which is a positive indicator for future growth. The firm has maintained a stable deposit strategy, with total deposits up 2.1% annualized, and expects to meet or exceed industry deposit growth for 2025. Additionally, Old National Bancorp’s tangible book value per share increased by 5% quarter-over-quarter and 13% year-over-year, reflecting a solid financial foundation. The merger with Bremer Bank is seen as a strategic move to optimize the balance sheet and expand the company’s footprint. Analysts from Barclays (LON:BARC) and Citi have shown interest in the company’s strategic flexibility and capital management post-merger.
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