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On Wednesday, Raymond (NSE:RYMD) James increased its price target on Hancock Whitney (NASDAQ:HWC) stock to $72 from the previous $64, while maintaining a Strong Buy rating. According to InvestingPro data, the stock is currently trading near its 52-week high of $62.40, with six analysts recently revising their earnings expectations upward for the upcoming period.
Following the fourth-quarter results of 2024, which surpassed expectations in terms of earnings per share (EPS) and pre-provision net revenue (PPNR), the firm's analyst expressed continued confidence in the bank's performance. With a market capitalization of $5.2 billion and a solid track record of maintaining dividend payments for 37 consecutive years, Hancock Whitney has demonstrated consistent financial stability.
Hancock Whitney's updated outlook for 2025 suggests a significant improvement over current consensus estimates, and its three-year corporate strategic objectives remain largely consistent with the previous year, with an adjustment to a higher return on assets (ROA) range of 1.4-1.5% compared to 1.3-1.5% in 2024.
The positive aspects of Hancock Whitney's fourth-quarter performance included better-than-expected deposit and earning asset growth, which, along with a net interest margin (NIM) that met consensus, led to higher net interest income. Additionally, fee income growth exceeded forecasts, and the company experienced a second consecutive quarter of declining noninterest expenses. Credit metrics remained relatively stable, resulting in a lower-than-expected loan loss provision. The bank also reported higher regulatory capital ratios and improved profitability.
However, there were some areas where the bank did not perform as well. The noninterest-bearing deposit mix saw a slight decline, the criticized loan ratio increased by 66 basis points to 3.47%, and tangible book value per share (TBV) decreased by 1.4% to $37.58.
Looking forward, Raymond James has adjusted its EPS estimates upwards, reflecting Hancock Whitney's positive outlook and the recent announcement of its acquisition of Sabal Trust Company, which is expected to be completed in the second quarter of 2025.
The firm's analyst believes that the bank's projected above-peer profitability, potential for capital deployment, and still-benign credit metrics, despite some normalization, present a favorable risk-reward scenario, especially when considering the stock's discounted valuation compared to its peers.
Trading at a P/E ratio of 13.5x and showing strong momentum with a 31.8% return over the past year, InvestingPro analysis suggests the stock is currently undervalued. For a deeper understanding of Hancock Whitney's valuation and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
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