Jefferies initiates BankUnited stock with Hold, $39 price target

Tuesday, Jefferies began coverage on BankUnited shares (NYSE:BKU) with a Hold rating and a price target set at $39.00, slightly above InvestingPro’s Fair Value estimate. The research firm highlighted BankUnited’s positive strides in growing its non-interest-bearing deposits and the potential for a robust net interest margin expansion due to its ongoing balance sheet transformation. The bank, with a market capitalization of $2.69 billion, has demonstrated solid revenue growth of 11.13% over the last twelve months.

BankUnited’s recent performance has been marked by a strategic shift that seems to be paying off, as noted by Jefferies. The company’s focus on increasing non-interest-bearing deposits is expected to contribute to a stronger net interest margin, a key profitability indicator for banks. With a healthy dividend yield of 3.44% and an overall Financial Health Score of "GOOD" according to InvestingPro, the bank shows promising fundamentals.

Despite these positive developments, Jefferies remains cautious, citing concerns over BankUnited’s growth and return metrics in the coming years. The firm expects that the bank may experience below-average growth in its balance sheet and potentially weaker returns compared to its competitors. However, the bank currently trades at an attractive P/E ratio of 11.04, with analyst targets ranging from $35 to $43.25.

The Hold rating also takes into account BankUnited’s valuation, which Jefferies considers to be at a premium when measured against its peers. This suggests that while the bank is making commendable progress in certain areas, its stock price may already reflect these advancements. InvestingPro analysis reveals additional insights, including 8 more key ProTips and comprehensive financial metrics available to subscribers through the platform’s detailed Pro Research Report.

BankUnited, based in Miami Lakes, Florida, provides a range of banking services to both individual and corporate customers. The company has been actively working to adapt its business model in response to changing market conditions and customer needs.

Investors and market watchers will likely monitor how BankUnited’s strategic initiatives unfold and whether they will lead to the anticipated balance sheet growth and net interest margin expansion. The $39 price target from Jefferies will serve as a benchmark for evaluating the company’s stock performance going forward.

In other recent news, BankUnited reported its first-quarter 2025 earnings, surpassing analyst expectations with an earnings per share (EPS) of $0.78 against a forecast of $0.74. Despite this positive earnings surprise, the company’s revenue fell short, coming in at $255.41 million compared to the anticipated $264.35 million. RBC Capital Markets adjusted its outlook on BankUnited, reducing the price target from $42.00 to $40.00, maintaining a Sector Perform rating, citing stable credit trends and management’s confidence in the current portfolio. Meanwhile, Goldman Sachs maintained a Sell rating with a $38.00 price target, highlighting a mixed quarter with better-than-expected expense control but a shortfall in net interest income.

The bank’s strategic focus on optimizing its balance sheet was evident, with net income reaching $58.5 million. However, challenges were noted due to the decline in net interest income and margin, reflecting a broader industry trend. BankUnited maintained its guidance for loan and deposit growth, with management projecting a net interest margin expansion to over 3% by the end of the year. The bank also experienced a decrease in average demand deposit accounts, though end-of-period figures showed improvement.

Analysts from RBC Capital noted that BankUnited’s management has expressed confidence in its strategic initiatives aimed at fostering growth, while Goldman Sachs pointed out the need for clarity on future expectations during the bank’s earnings call. The bank’s efforts to grow its commercial loan portfolio and implement favorable funding changes are key components of its strategy to expand margins and enhance its financial profile.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.