On Monday, Piper Sandler adjusted its price target for Atlantic Union Bankshares (NASDAQ:NYSE:AUB) stock, reducing it to $38 from the previous $40, while maintaining an Overweight rating.
The revision follows a reported 15 basis point decline in the bank's net interest margin (NIM) to 3.19% for the quarter, which was attributed to higher funding costs that had not been anticipated.
Atlantic Union Bankshares management provided an updated guide for 2024 that now includes the acquisition of AMNB. The fourth quarter of 2024 run-rate appeared to align closely with previous models, and the earnings per share (EPS) estimate for 2025 was only modestly reduced by 4% compared to the 2024 estimate.
The bank's outlook suggests that it remains on track to meet its target profitability, aiming for a return on assets (ROA) of 1.25% with full cost savings realized. In light of the adjusted estimates, Piper Sandler's new price target of $38 is based on approximately 11 times the firm's 2025 EPS estimate for Atlantic Union Bankshares.
The price target adjustment reflects the immediate impact of the bank's higher funding costs on its NIM, as well as the incorporation of AMNB's acquisition into the bank's future financial projections. The Overweight rating indicates that despite the changes in estimates, Piper Sandler continues to view the stock favorably relative to the market.
InvestingPro Insights
Investors considering Atlantic Union Bankshares (NASDAQ:AUB) will find additional context through InvestingPro data and insights. Notably, the company has a Price/Earnings (P/E) Ratio of 12.01, signaling a valuation that may be attractive compared to industry peers. The Price/Book (P/B) ratio stands at 0.96, potentially indicating the stock is reasonably valued with respect to its net assets. Furthermore, the bank has demonstrated a stable dividend policy, maintaining payments for 31 consecutive years and growing dividends at a rate of 6.67% over the last twelve months.
Two InvestingPro Tips for Atlantic Union Bankshares highlight important aspects for investors. Firstly, the bank's commitment to shareholder returns is underscored by its history of raising its dividend for 13 consecutive years. Additionally, analysts predict the company will be profitable this year, building on its profitability over the last twelve months. These insights are particularly pertinent given the recent adjustments in Piper Sandler's price target and the bank's own financial projections.
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