On Tuesday, Stephens raised the stock price target for Fulton Financial (NASDAQ: NASDAQ:FULT) to $17.50 from $15.50, maintaining an Equal Weight rating on the stock. The adjustment follows Fulton Financial's recent acquisition of FRBK in a deal facilitated by the Federal Deposit Insurance Corporation (FDIC), which resulted in Fulton adding approximately $5.9 billion in assets and about $5.5 billion in liabilities.
The transaction, which occurred last week, was noted for its departure from the typical structure of FDIC-assisted deals, as it did not include a loss share agreement. Instead, it featured a modest bargain purchase gain of $51 million. In response to the deal's initially dilutive impact on tangible book value (TBV), Fulton Financial raised $287.5 million in common equity to strengthen its capital position.
In light of the acquisition, Stephens anticipates cost savings, a restructuring of the acquired FRBK balance sheet, and a reduction in reliance on wholesale funding. These factors led to an increase in the firm's operating earnings per share (Op. EPS) estimates for 2024 and 2025 by 8% and 23%, respectively, to $1.60 and $1.72.
The revised stock price target of $17.50 reflects Fulton's enhanced earnings capacity, which is projected to yield a return on assets (ROA) of approximately 0.95%-1.00%, and a shift in positive sentiment toward the company.
Despite the positive outlook, Stephens maintains an Equal Weight rating on Fulton Financial shares, suggesting that investors may want to seek a more favorable entry point into the stock.
InvestingPro Insights
Following the recent strategic moves by Fulton Financial, current metrics from InvestingPro present an interesting picture for investors. With a market capitalization of approximately $3.08 billion and a Price/Earnings (P/E) ratio of 10.34, Fulton appears to be trading at a value that reflects its steady earnings.
The company has also demonstrated a commitment to shareholder returns, maintaining dividend payments for an impressive 43 consecutive years, with a current dividend yield of 4.0%. This is particularly noteworthy for income-focused investors.
Analyzing the company's performance over the last year reveals a substantial price total return of 70.11%, indicating strong market confidence which may be attributed to Fulton's operational strategies and recent acquisition activities. Moreover, with six analysts having revised their earnings upwards for the upcoming period, there is an optimistic outlook on the company's future profitability.
For those interested in deeper analysis, InvestingPro offers additional insights and metrics for Fulton Financial. With the use of the promo code PRONEWS24, investors can get an extra 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking a wealth of financial data and expert tips. Currently, there are 8 more InvestingPro Tips available for Fulton Financial, which could further inform investment decisions.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.