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Investing.com - Piper Sandler maintained its Overweight rating and $135.00 price target on UMB Financial (NASDAQ:UMBF) on Tuesday, citing expectations for strong second-quarter earnings.
The research firm projects UMB Financial’s operating earnings per share will exceed consensus estimates by $0.09, driven by core net interest income growth of approximately 13% compared to the previous quarter, which includes a full quarter of HTLF acquisition results. Piper Sandler attributes this growth to UMB’s "more durable balance sheet growth prospects" through continued market share gains.
Piper Sandler forecasts UMB’s core net interest margin will increase by 4 basis points quarter-over-quarter to 2.79%, benefiting from the redeployment of excess liquidity and anticipated funding cost relief. The firm also sees potential for UMB to exceed consensus fee income estimates of $181 million, with Piper Sandler projecting $184 million as UMB increases market share across various verticals and expands its HSA business to HTLF’s client base.
Operating expenses may come in better than consensus expectations, with Piper Sandler estimating $372 million versus consensus of $375 million, potentially reflecting greater cost savings from the HTLF acquisition, which has a 27.5% target. Credit quality is expected to improve following elevated net charge-offs in the first quarter, which reached 45 basis points primarily due to HTLF integration, while legacy UMB’s net charge-offs were only 10 basis points.
Piper Sandler believes UMB Financial is well-positioned to regain its historical price-to-earnings premium of 2-3 times, compared to its current 8.9x multiple on Piper Sandler’s 2026 earnings estimate, while peers trade at 9.2x.
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