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Investing.com - Keefe, Bruyette & Woods (KBW) upgraded Horizon Bancorp (NASDAQ:HBNC) from Market Perform to Outperform and raised its price target to $19.00 from $18.00 on Tuesday.
The upgrade follows Horizon Bancorp’s announcement of strategic actions designed to unlock earnings power while improving interest rate risk, increasing liquidity, reducing consumer risk, and accelerating capital generation to support future growth. InvestingPro analysis indicates the company’s net income is expected to grow this year, with two analysts recently revising their earnings estimates upward.
According to KBW, Horizon has completed a $90 million equity offering at $14.50 per share and plans to issue $100 million of subordinated notes, sell approximately $1.4 billion of securities, and divest around $200 million of auto loans.
The bank also intends to pay down approximately $1.1 billion of wholesale funding and redeem outstanding subordinated debt while investing remaining proceeds at what KBW describes as "attractive yields."
KBW noted that while these actions will have a meaningful impact on pro forma tangible book value, they should boost Horizon’s return profile by approximately 50 basis points to return on assets, allowing for a "cleaner and stronger" balance sheet.
In other recent news, Horizon Bancorp completed a common stock offering, raising approximately $103.5 million in gross proceeds. The company sold 7,138,050 shares at $14.50 per share, including additional shares through underwriters’ options. This follows the company’s initial announcement of pricing 6,207,000 shares at the same price, aiming to raise $90 million. Horizon Bancorp plans to use the proceeds for general corporate purposes, including potential balance sheet repositioning. Additionally, Keefe, Bruyette & Woods raised Horizon Bancorp’s stock price target from $17 to $18, citing stronger-than-expected earnings of $0.47 per share. The earnings surpassed forecasts due to robust pre-provision net revenue and a lower tax rate. In other developments, Horizon Bank appointed John Hatfield as Senior Vice President and Director of Marketing. Hatfield will lead the strategic direction of the bank’s marketing efforts, focusing on brand awareness and sales effectiveness.
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