On Thursday, RBC (TSX:RY) Capital maintained its Sector Perform rating and $28.00 price target for Associated Banc-Corp (NYSE: NYSE:ASB), which currently trades at $26.11 with a P/E ratio of 21.5. According to InvestingPro analysis, the stock appears fairly valued.
The firm's decision follows the company's announcement of several balance sheet restructuring actions, including the sale of a portion of their residential mortgage loan portfolio, the pay-down of borrowings, and a repositioning of the securities portfolio.
Associated Banc-Corp's recent common equity raise is intended to support these restructuring activities. The stock has shown strong momentum with a 27% year-to-date return, while maintaining a solid 3.52% dividend yield. According to RBC Capital, this move is expected to lead to a stronger margin and spread revenue run-rate for the company in the future.[Want deeper insights? InvestingPro subscribers have access to 8 additional key tips and comprehensive financial analysis for Associated Banc-Corp.]
As a result of the restructuring announcement made today, RBC Capital has kept its 2024 earnings per share (EPS) estimate for Associated Banc-Corp at $2.16. However, the firm has revised its EPS estimates for the following years, increasing the 2025 estimate from $2.18 to $2.40 and the 2026 estimate from $2.46 to $2.70.
The price target of $28.00 has been reaffirmed by RBC Capital, aligning with the broader analyst consensus, as six analysts have recently revised their earnings estimates upward. The analyst's commentary underscores the anticipation of improved financial performance for Associated Banc-Corp as a result of the recent strategic moves, with analyst targets ranging from $24 to $30.
In other recent news, Associated Banc-Corp has undergone significant changes in its financial strategy. The company has announced a balance sheet restructuring, which included the sale of approximately $1.3 billion of securities and an agreement to sell around $0.7 billion in mortgage loans. Despite an expected net loss in the fourth quarter of 2024, analysts from Piper Sandler and Baird maintain a Neutral rating on the company's shares, with Piper Sandler raising its price target from $26.00 to $28.00.
In addition to its restructuring, Associated Banc-Corp has launched a public offering of 11.5 million shares of its common stock. The company plans to use the net proceeds for general corporate purposes, including supporting its organic growth and capital generation.
In terms of dividends, Associated Banc-Corp has increased its quarterly cash dividend from $0.22 to $0.23 per common share. This move showcases the company's commitment to providing value to its shareholders and reflects its financial health.
Lastly, Associated Banc-Corp reported a diluted earnings per share (EPS) of $0.56 for the third quarter of 2024. The company also observed a 1% rise in total loans, primarily in the commercial and auto sectors, and a $6 million increase in net interest income to $253 million.
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