Huntington Bancshares: A Regional Banking Beacon in a Challenging Landscape

The banking sector has faced headwinds in recent years, from volatile interest rates to lingering aftershocks of the 2023 financial crisis. Yet, among the mid-cap regional banks, Huntington Bancshares (NASDAQ: HBAN) is emerging as a standout story. A recent upgrade from Wolfe Research to Outperform, coupled with a $21 price target, underscores a compelling narrative of resilience, undervalued growth, and strategic execution. Let's dissect why HBAN could be a key player in the recovery of regional banking.

The Catalyst: Wolfe Research's Bullish Call

On July 3, 2025, Wolfe Research raised its rating on HBAN to Outperform, citing strong fundamentals and a favorable outlook for net interest margin (NIM) expansion. The $21 price target represents a 20.69% upside from its July 3 close of $17.39, placing it at the high end of analyst estimates. Analyst Bill Carcache highlighted Huntington's post-crisis performance: 9% loan growth and 14% deposit growth since 2023, outpacing mid-cap peers by 12 percentage points. This growth, paired with a 30-basis-point gain in deposit market share since 2022, signals a bank that's not only surviving but thriving in a competitive environment.

Why HBAN's Resilience Matters

Regional banks like HBAN have long been perceived as vulnerable to economic cycles, but Huntington's performance defies this narrative. Key drivers include:

1. NIM Expansion: With the Federal Reserve's rate hikes and the ongoing repricing of fixed-rate assets, Huntington is positioned to benefit from higher interest income. Analysts estimate NIM growth through 2026, a critical tailwind for profitability.
2. Deposit Strength: Huntington's $123 billion in assets and strong deposit base (up 14% since 2023) provide a stable funding source. Its ability to gain market share in deposits—critical in a low-growth environment—gives it an edge over competitors.
3. Loan Quality: Post-crisis stress tests and conservative underwriting have kept non-performing loans low, reducing risk exposure.

Valuation: Undervalued or Overhyped?

While Wolfe's $21 target is optimistic, skepticism persists. GuruFocus estimates a one-year GF Value of $15.51, implying a potential 10.86% downside from current prices. However, this overlooks Huntington's recent catalysts:
- Q1 2025 Earnings Beat: EPS of $0.34 vs. estimates of $0.31, with revenue hitting $1.94 billion—$110 million above forecasts.
- $1 Billion Buyback: Announced in Q1, this signals confidence in undervaluation and efficient capital allocation.

Institutional Sentiment: Mixed Signals

Institutional ownership data reveals a divided view. While total institutional holdings dipped 0.48% in Q2 2025, some large funds reduced stakes (e.g., T. Rowe Associates cut holdings by 21.46%), others like Invesco increased theirs by 8.02%. The average portfolio weight for HBAN rose to 0.19%, suggesting cautious optimism. A put/call ratio of 0.46 further points to bullish near-term sentiment.

Risks to Consider

No investment is without risk. Potential headwinds include:
- Economic Downturn: A recession could pressure loan demand and asset quality.
- Interest Rate Volatility: Rapid Fed rate cuts could compress NIMs if fixed-rate assets reprice too quickly.
- Competition: Larger banks may poach depositors or loans in HBAN's Midwest markets.

Investment Thesis

Despite risks, HBAN's regional dominance (839 branches across seven Midwestern states), strong deposit franchise, and operational discipline make it a compelling play. The Wolfe Research upgrade, supported by tangible growth metrics and a buyback, suggests a stock undervalued by broader market pessimism.

Recommendation: For investors seeking regional banking exposure with a focus on stability and growth, HBAN offers a high reward-to-risk ratio at current levels. A target price of $21, if achieved, implies a 20% return, while the GF Value acts as a floor. Position size should reflect broader portfolio risk tolerance, with a focus on long-term holding as NIMs expand and loan growth sustains momentum.

In a sector where resilience is rare, Huntington Bancshares is proving that regional banks can not only survive but lead. The upgrade from Wolfe Research is more than a rating change—it's a signal that HBAN's best days may still be ahead.