Citi raises Wintrust Financial stock PT, keeps Buy rating on strong loan growth trends

On Monday, Wintrust Financial (NASDAQ:WTFC) Corporation's (NASDAQ:WTFC) stock price target was increased by Citi from $122.00 to $126.00. The firm maintained a Buy rating on the shares, citing positive trends and expectations for the company's financial performance.

The adjustment comes after a mid-quarter update call with Wintrust's Vice Chairman and COO, Dave Dykstra. According to Citi, Wintrust has been experiencing loan growth that surpasses that of its peers, with a 10% or more last quarter annualized (LQA) growth rate. This growth has been reported across various segments, including commercial, commercial real estate, and premium finance.

Wintrust's net interest margin (NIM) has remained relatively stable, even with the loan growth, due to a pro-forma balance sheet. This stability is expected to continue, and lower interest rates could further support the flat NIM outcomes by alleviating deposit cost pressures.

Citi also anticipates that net interest income (NII) for Wintrust will likely continue to rise into 2025. This expectation is based on the combination of the company's strong loan growth and stable new money loan yields, despite slight net interest margin compression.

Furthermore, Citi suggests that if lower interest rates stimulate the mortgage market, the positive impact could be felt even amid the typical seasonal slowdown. The firm's updated estimates for earnings per share (EPS) are the highest among consensus estimates, and they may prove conservative. Citi is modeling a rebound in the mortgage market to occur in the spring of 2025.

In other recent news, Wintrust Financial reported second-quarter earnings per share (EPS) of $2.32, falling short of the analyst consensus estimate of $2.42. However, the company's revenue for the quarter was $591.75 million, slightly above the consensus estimate of $587.31 million.

Despite this, various firms have shown confidence in Wintrust Financial. Truist Securities increased the price target to $118 from the previous $107, reiterating a Buy rating on the stock. This followed a reassessment of the company's earnings projections and the integration of the Macatawa acquisition, anticipated to complete in the latter part of the fourth quarter of 2024.

Piper Sandler adjusted its outlook on the company, increasing the price target to $125 from $113 while maintaining an Overweight rating. The firm anticipates that Wintrust Financial will continue to experience above-average net interest income (NII) growth. RBC Capital maintained its Outperform rating on the company, with a steady price target of $117.00, highlighting the company's robust loan growth that contributed to an increase in net interest income.

DA Davidson raised the price target for Wintrust Financial to $125, citing a positive outlook on the company's net interest income (NII). Meanwhile, Citi maintained a 'buy' rating, despite lowering its price target to $113, highlighting the company's key growth expectations and market position. Lastly, Keefe, Bruyette & Woods maintained an 'outperform' rating on Wintrust, raising the stock price target to $110, expressing confidence in the company's robust loan growth and strategic mergers and acquisitions.

InvestingPro Insights

As Wintrust Financial Corporation (NASDAQ:WTFC) garners a positive outlook from Citi, real-time data from InvestingPro complements this sentiment with some encouraging figures. The company's market capitalization stands robust at $7.16 billion, reflecting investor confidence. Moreover, the P/E ratio, a key metric for valuation, is at a reasonable 11, indicating that the stock could be attractively priced relative to earnings.

InvestingPro Tips highlight that Wintrust has demonstrated a commitment to shareholder returns, having increased its dividend for 10 consecutive years and maintained payments for 25 years. This consistency is a testament to the company's financial stability and prudent management. Additionally, analysts are optimistic about Wintrust's profitability, with revisions to earnings estimates trending upwards for the upcoming period.

With a solid revenue growth of 6.88% over the last twelve months as of Q2 2024, Wintrust is showing a capacity to expand its income streams effectively. This is coupled with an impressive operating income margin of 42.06%, which speaks to the company's operational efficiency. For investors looking to delve deeper into the financial nuances of Wintrust, there are over five additional InvestingPro Tips available at: https://www.investing.com/pro/WTFC, offering a comprehensive analysis to inform investment decisions.

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