M&T Bank Shares Deserve A Premium Valuation: Baird

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With big banks having cleared the decks, regional bank earnings pick up steam in the coming days. Baird said despite the space seeing some profit-taking, it remains opportunistic with bank exposure.

The Analyst

Analyst David George upgraded M&T Bank Corporation MTB from Underperform to Neutral.

The Thesis

M&T Bank shares have lost about 10 percent over the past month despite the bank's solid Q1 2018 results and outlook, George said in a Wednesday note. The bank's core earnings of $2.78 per share exceeded expectations, while it forecast a 5-8 basis-point NIM expansion with each 25 basis-point hike in Fed rates, the analyst noted.

The analyst also sees a pick up in C&I and CRE loan growth and continuation of positive operating leverage.

"We think it is less likely forward P/E multiples for MTB or other asset-sensitive regionals reach the mid-teens now that the higher-rate catalyst has played out to some degree with benefits from several more rate hikes mostly baked into consensus estimates," the analyst said.

That said, Baird believes shares of M&T Bank deserve a premium valuation, citing its solid track record of capital allocation, risk management and superior returns.

Price Action

At time of writing, shares were up about 1 percent at $178.71.

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Posted In: Analyst ColorUpgradesAnalyst RatingsBairdDavid George
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