JPMorgan upgrades First Hawaiian stock rating on rate outlook
JPMorgan has upgraded First Hawaiian stock from Underweight to Neutral and lowered its price target to $29.00, down from $30.00. The current share price is $24.62, indicating potential upside from the analyst's target price. According to InvestingPro data, the bank appears undervalued with a Fair Value of $29.03, matching JPMorgan's estimate.
The recent rise in federal funds rates has created a more favorable earnings environment for the bank. Half of First Hawaiian's loans are floating rate, while its interest bearing deposit costs are the lowest among JPMorgan's covered banks. The bank's well-positioned asset side, low funding costs, and modest funding needs make it capable of retaining asset-side benefits.
Interest bearing deposit costs were 1.75% in Q2, about 100 basis points lower than the median for JPMorgan's coverage. The bank has paid dividends for 11 consecutive years and offers a high shareholder yield. First Hawaiian is expected to grow loans by 3-4% this year, outpacing the average bank in JPMorgan's coverage. This should reduce the need to compete aggressively on deposit pricing post-rate increase.
The firm considers First Hawaiian among the 1,400+ US equities with comprehensive Pro Research Reports.
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