BofA raises M&T Bank shares target on robust Q1 earnings and revised NII forecast

On Tuesday, BofA Securities adjusted its price target for M&T Bank (NYSE:MTB) shares, increasing it to $160 from the previous $157, while reaffirming a Buy rating. The adjustment comes after M&T Bank reported first-quarter earnings per share (EPS) of $3.15, surpassing both the firm's and consensus estimates of $3.08 and $3.14, respectively.

The bank's earnings beat was attributed to a lower-than-expected tax rate of 21.6% compared to the anticipated 24%, and a modest increase in pre-provision net revenue (PPNR). These factors helped to balance out the rise in credit provisioning costs, which were reported at $200 million, higher than the expected $175 million and $171 million.

M&T Bank's management has also revised its net interest income (NII) guidance for the year 2024, now anticipating over $6.8 billion. This is an increase from the previous range of $6.7 billion to $6.8 billion, reflecting the benefit of sustained higher interest rates.

In light of these developments, BofA Securities has revised its full-year 2024 and 2025 EPS estimates for M&T Bank to $14.00 and $15.94, up from $13.65 and $15.60, respectively. The positive revisions in EPS estimates are the primary drivers behind the new price target of $160.

The bank's performance in the first quarter and the updated financial outlook for the coming years signal a positive trajectory, as reflected in the analyst's maintained Buy rating and increased price target.

Following the upbeat assessment by BofA Securities, M&T Bank (NYSE:MTB) is also showing promising signals in the InvestingPro platform. The bank's commitment to shareholder returns is evident as it has not only raised its dividend for 7 consecutive years but has also maintained dividend payments for an impressive 46 consecutive years. This consistency is a testament to the bank’s financial stability and is reflected in a solid dividend yield of 3.7% as of early 2024. Investors looking for income-generating stocks might find this an attractive feature.

In terms of valuation, M&T Bank is trading at a low P/E ratio of 9.07, which, when paired with its near-term earnings growth, results in a PEG ratio of just 0.24—indicating potential undervaluation relative to its earnings growth. For investors considering entry points, these metrics suggest that the stock could offer value. Additionally, analysts predict the company will be profitable this year, with a robust operating income margin of 44.41% over the last twelve months as of Q4 2023. This profitability is further confirmed by a basic EPS (Continuing Operations) of $15.85.

For those interested in more in-depth analysis and additional metrics, InvestingPro offers further insights. There are 7 more InvestingPro Tips available for M&T Bank, which subscribers can access to refine their investment strategy. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and gain comprehensive data that may help inform your investment decisions.

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