On Thursday, Wells Fargo (NYSE:WFC) raised the price target for BankUnited shares on the New York Stock Exchange (NYSE:BKU) to $50 from the previous target of $48, while retaining an Overweight rating on the stock. Currently trading at $39.59 with a market capitalization of nearly $3 billion, BKU has shown impressive momentum with a 39% return over the past year. The revision follows BankUnited’s robust performance in the fourth quarter, which exceeded expectations, and guidance that appears both conservative and well ahead of consensus forecasts.
Wells Fargo analysts expressed increased confidence in BankUnited as a top pick, particularly for the first half of 2025, attributing this to anticipated industry-leading growth in demand deposit accounts (DDA). According to InvestingPro data, BKU has maintained dividend payments for 15 consecutive years and currently offers a 2.9% dividend yield, demonstrating consistent shareholder returns. The strong results in the fourth quarter, typically a slower period for deposit growth, have reinforced this confidence. The improved net interest margin (NIM) in the fourth quarter has given management the confidence to target a 3% NIM in 2025, a goal that is not currently reflected in consensus estimates.
The positive outlook is further supported by the potential for upside through various avenues, including mergers and acquisitions. The analysts underscored the accelerating momentum expected in the first half of 2025, driven by the projected leading DDA growth. As a result of these factors, Wells Fargo has increased its earnings per share (EPS) forecasts for fiscal years 2025 and 2026 to $3.30 and $3.93, up from the prior estimates of $3.23 and $3.70, respectively.
The revised price target of $50 represents 125% of the next twelve months’ tangible book value (NTM TBV) for BankUnited. Trading at a P/E ratio of 13 and price-to-book of 1.05, BKU shows attractive valuation metrics. This valuation adjustment and the sustained Overweight rating indicate Wells Fargo’s positive stance on the bank’s financial prospects and strategic positioning in the market. For deeper insights into BKU’s valuation and financial health metrics, including exclusive ProTips and comprehensive analysis, visit InvestingPro.
In other recent news, BankUnited has been the focus of numerous analyst reviews and financial reports. Citi has increased BankUnited’s target to $44 while maintaining a neutral rating, reflecting a cautious optimism about the bank’s potential for future earnings improvement. This adjustment is based on the bank’s net interest income and the possibility of pre-provision net revenue growth if loan growth materializes.
BankUnited’s Q3 results were robust, beating estimates with a net income of $61.5 million, or $0.81 per share. The bank’s net interest margin also saw a year-over-year rise of 9% to 2.78%. Despite slower than expected loan growth and a decrease in deposits from the title business, the bank’s tangible common equity to total assets ratio improved to 7.6%, and the tangible book value per share increased to $36.52.
These recent developments point to a consistent growth trajectory for BankUnited. The bank anticipates mid-single-digit growth in net interest income for the full year and strong growth in noninterest-bearing deposits in the first half of the next year. However, it is important to note that these projections are based on current market conditions and may be subject to change.
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