On Friday, Keefe, Bruyette & Woods adjusted its outlook on United Bankshares Inc. (NASDAQ:UBSI), reducing the price target to $38 from the previous $40, while keeping a Market Perform rating on the stock. The firm based this decision on the company's first-quarter performance for 2024, which was in line with expectations, but indicated a mixed forecast for the year ahead.
The report from Keefe, Bruyette & Woods highlighted that the guidance for 2024 suggests there might be a decrease in Net Interest Income (NII), but there could be benefits from provisioning. Consequently, the firm has revised its earnings estimate for 2024 to $2.60, down from $2.65, and for 2025 to $2.70, down from $2.75. The adjustments reflect a balance between lower NII and a reduced provision.
United Bankshares' shares are currently trading at 1.6 times Tangible Book Value (TBV) and 12.5 times the projected earnings per share (EPS) for 2024. The analyst noted that this valuation represents a deserved premium. Despite this premium, the firm's stance remains at Market Perform due to the valuation.
The price target adjustment to $38 from $40 is a reflection of the nuanced outlook for the company's financial performance. Keefe, Bruyette & Woods' revision takes into account the potential headwinds and tailwinds that United Bankshares may face in the coming periods, balancing the factors that could affect the company's stock value.
InvestingPro Insights
As investors digest the recent price target adjustment for United Bankshares Inc. (NASDAQ:UBSI) by Keefe, Bruyette & Woods, real-time data from InvestingPro offers additional context to the bank's financial standing. United Bankshares boasts a solid history of dividend reliability, having raised its dividend for 35 consecutive years and maintained payments for 41 years, an indicator of financial stability that may reassure income-focused investors. The company is also expected to remain profitable this year, as reflected in the last twelve months as of Q1 2024, with a reported operating income margin of 47.58%.
However, challenges are evident with three analysts revising their earnings downwards for the upcoming period and a noted weakness in gross profit margins. The current P/E Ratio stands at 12.94, closely aligned with the adjusted P/E Ratio for the last twelve months as of Q1 2024 at 12.96, suggesting the stock is priced in line with its earnings. Despite a slight revenue decline of -3.55% over the last twelve months, the dividend yield remains attractive at 4.38%, potentially offering a buffer against price volatility for dividend investors.
For those seeking a more in-depth analysis, InvestingPro provides additional InvestingPro Tips to guide investment decisions. United Bankshares investors and prospective shareholders can explore a comprehensive set of metrics and expert insights, including 5 more InvestingPro Tips, by visiting https://www.investing.com/pro/UBSI. To access these insights and more, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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