On Friday, Keefe, Bruyette & Woods adjusted their price target on shares of National Bank Holdings (NYSE:NBHC), reducing it to $39 from the previous $40. The firm maintained its Market Perform rating on the bank's stock. This revision follows a 6% decline in the bank's net interest income (NII) in the first quarter.
The firm has recalibrated its earnings estimates for National Bank Holdings, projecting a 4-9% decrease. The most significant adjustment is for the year 2025, which accounts for the anticipated effects of the Durbin Amendment as the bank is expected to surpass $10 billion in assets this year. This threshold is significant because crossing it subjects banks to a cap on the fees they can charge merchants for debit card processing under the Durbin Amendment.
Despite the lowered expectations, the firm acknowledged National Bank Holdings' historical strengths, such as robust loan growth, effective deposit generation, and shareholder capital return. These factors are seen as potential drivers that could lead to better-than-expected financial performance.
The firm's stance remains cautious, with the analysts stating they are staying on the sidelines after adjusting their earnings per share (EPS) expectations downward. The new price target reflects this conservative outlook, even as the analysts recognize the bank's potential to outperform their estimates through its traditional areas of success.
InvestingPro Insights
As National Bank Holdings (NYSE:NBHC) navigates through the challenges of the Durbin Amendment and adjusts to market conditions, the latest data from InvestingPro offers a snapshot of the company's financial health and future prospects. With a market capitalization of $1.26 billion and a P/E ratio that is appealing at 9.56, National Bank Holdings presents an interesting case for investors looking for value in the banking sector. Notably, the company has demonstrated a commitment to shareholder returns, having increased its dividend for 8 consecutive years and maintained dividend payments for 13 consecutive years, as highlighted by InvestingPro Tips.
Additionally, National Bank Holdings is trading at a low P/E ratio relative to near-term earnings growth, with a PEG ratio of just 0.34, suggesting that the stock may be undervalued when considering its earnings growth potential. Analysts predict the company will remain profitable this year, which is corroborated by a solid revenue growth of 20.74% over the last twelve months as of Q1 2024. While the company does face headwinds with weak gross profit margins and an expected drop in net income, the overall picture remains one of resilience and profitability over the last year.
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