Huntington Bancshares: Downgrading to HOLD; M&A Overhang and Deposit Cost Outlook Temper Upside

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Huntington Bancshares: Downgrading to HOLD; M&A Overhang and Deposit Cost Outlook Temper Upside

. Cadence) to the midpoint of the 36–37% range at 1Q earnings, down from the *Adj EPS

high end previously, reflecting deliberate loan mix optimization to align with the bank's moderate- *Rev. (MM)

Source: Visible Alpha

to-low risk appetite alongside some expected runoff from acquired balances. While prudent from a Source: Visible Alpha

credit standpoint, we wonder if this more measured stance could temper HBAN's growth trajectory,

one of our key positive points on the stock, even as broader industry loan growth remains healthy.

HBAN Shares Have De-Rated vs. Peer Median

M&A overhang may persist near-term, while the prospects of another potential deal presents a P/E Following Deal Announcements

17.0xlingering risk in 2027. Though integrations of Veritex and Cadence appear to be tracking reasonably

well, we expect shares may trade at an M&A acquirer discount over the next few quarters as 15.0x

investors await tangible evidence of execution against management's synergy targets. HBAN 13.0x11.0x

similarly de-rated in 2021 during the TCF integration. While management has signaled a preference 9.0x

for organic growth, we are hesitant to rule out another tuck-in deal post-integration of Veritex and 7.0x

Cadence, which could prolong the valuation discount. 5.0x

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Valuation. HBAN trades at 9.5x our 2027 EPS estimate, below regional peers at 10.7x, and below .Source: Jefferies,HBAN NTMFactSet,P/E Multiple companyRegional Bank documentsPeer Median NTM P/E Multiple