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UMB Financial (NASDAQ:UMBF) stock advanced 2.4% in Wednesday premarket trading after Piper Sandler upgraded the regional bank to Overweight from Neutral as a number of company-specific catalysts could drive future outperformance in the beaten-down stock.
The lender has the potential to generate “superior” net interest income growth in the back half of this year and in 2024, owing to ongoing expansion in loans yields, redeployment of around $300M in quarterly securities cash flow run-off, and less upward deposit cost pressure, analyst Nathan Race wrote in a note.
For its fee income businesses, which historically have raked in above-average growth, Race expects its continued strong fee income growth prospects to become a big driver in overall revenue.
On a technical footing, UMBF is trading at 8.5x 2024 estimated EPS and largely aligns with peers at 8.3x. That compares with its 2.5x turn average premium over the last 10 years. SA Quant system gave UMBF a Valuation Grade of “D+,” with the poorest marks in dividend yield and forward price-to-earnings growth ratio.
As such, the stock is changing hands at a “relatively discounted valuation to shares’ historical premium over peers,” Race noted.
The Overweight rating disagrees with the Quant rating of Sell and and aligns with the average sell-side analyst rating of Hold.
