City Holding stock maintains $130 target from KBW

On Tuesday, Keefe, Bruyette & Woods maintained a Market Perform rating on City Holding (NASDAQ: CHCO) with a steady price target of $130.00. The firm's analyst highlighted a mix of outcomes in the company's recent performance, noting that while City Holding surpassed expectations due to increased fees, reduced expenses, and lower taxes, it also experienced a slight decline in Net Interest Margin (NIM). The NIM dropped by 12 basis points to 3.75%, which was below the anticipated 3.85%. Despite this, robust growth of 11% on a linked-quarter annualized basis was seen, which helped mitigate the impact of the lower NIM. InvestingPro analysis shows the company maintains a "GOOD" overall financial health score, with particularly strong marks in profitability metrics.

The analyst pointed out that the current economic environment, which is expected to maintain higher interest rates for an extended period, could benefit the company. City Holding's shares are currently trading at 15.7 times the projected earnings for 2025 and 3.1 times the tangible book value per share. According to the firm, the market's valuation of City Holding already accounts for anticipated higher levels of profitability and capital.

City Holding's performance was bolstered by a combination of factors. The company's higher fees and lower expenses contributed positively to the results, while lower taxes provided an additional boost. However, the company faced a slight setback with a decrease in Net Interest Income (NII) by a penny and a fall in NIM.

The analyst's decision to reiterate the Market Perform rating reflects a view that City Holding's stock price already incorporates the company's expected financial strength and profitability. The assessment suggests that while the company has strong growth prospects, the current stock price is aligned with these expectations. Based on comprehensive InvestingPro Fair Value analysis, the stock appears to be trading near its fair value, with a P/E ratio of 15.2x and return on equity of 16%.

In summary, Keefe, Bruyette & Woods sees City Holding as a stable investment, with current valuations reflecting its growth and profitability potential in a higher-for-longer interest rate environment. The firm maintains its Market Perform rating without any change to the price target, indicating a neutral outlook on the stock's future performance.

In other recent news, City Holding has reported a fourth-quarter core earnings per share (EPS) of $2.11, surpassing analyst expectations due to lower expenses and provisions for credit losses. The EPS exceeded Piper Sandler's estimate by $0.15 and was $0.19 higher than the consensus among Wall Street analysts. The company's expenses were lower than projected by Piper Sandler, contributing an additional $0.03 to the EPS. However, net interest income fell slightly short of expectations.

In more news, City Holding mourns the loss of long-serving director Tracy W. Hylton II, who played a crucial role during the 1998 merger of Horizon Bancorp (NASDAQ:HBNC) and City Holding Company (NASDAQ:CHCO). His leadership contributed significantly to the company's success, with City Holding being named the top-performing bank in the US by Forbes in 2024. In memory of Mr. Hylton, City Holding has donated $15,000 to a scholarship fund established by him and his wife.

Lastly, City Holding has declared a dividend of $0.79 per common share, continuing its practice of rewarding shareholders. This dividend will be payable to shareholders of record as of mid-January. Piper Sandler has adjusted its price target on City Holding shares to $125 from the previous $135 while maintaining a Neutral rating. These are the recent developments shaping the trajectory of City Holding Company.

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