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Investing.com - Morgan Stanley (NYSE:MS) upgraded Valley National Bancorp (NASDAQ:VLY) from Equalweight to Overweight on Thursday, while raising its price target to $11.00 from $10.00. The $5.2 billion regional bank has shown impressive momentum, with shares delivering a 46.5% return over the past year according to InvestingPro data.
The upgrade reflects Valley National’s significant actions over the past 12 months to strengthen its balance sheet, reduce commercial real estate concentration, increase reserve ratios, and build capital.
Morgan Stanley noted the bank has successfully lowered deposit costs to improve net interest margin, with additional improvement expected when interest rates decrease further.
The firm believes these positive factors are not reflected in Valley National’s current valuation, as shares trade at a 2x discount to peers—their largest discount in nearly a year.
Morgan Stanley’s $11 price target applies a 10x target P/E multiple to its 2026 EPS estimate of $1.14, suggesting potential upside of 18% for the stock.
In other recent news, Valley National Bancorp reported its Q1 2025 earnings, which fell short of analyst expectations. The company posted an earnings per share (EPS) of $0.18, missing the forecasted $0.19, and revenue of $478.4 million, below the expected $482.3 million. Despite these shortfalls, the bank’s net interest margin increased for the fourth consecutive quarter, and core customer deposits grew by $600 million. In analyst updates, Keefe, Bruyette & Woods maintained a Market Perform rating with an $11 target, citing positive trends in Valley National’s balance sheet and capital strengthening. Jefferies initiated coverage with a Hold rating and a $10 target, recognizing improvements in the bank’s net interest margin but expressing caution due to its transitional phase. Additionally, Valley National disclosed shareholder vote outcomes and the upcoming retirement of President Thomas A. Iadanza, with CEO Ira Robbins set to assume the role of President by June 2025. The bank’s strategic changes and governance updates are part of its ongoing efforts to enhance financial stability and leadership.
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