Baird analysts downgraded Huntington Bancshares (NASDAQ:HBAN) to Neutral from Outperform, setting a price target of $15 on the stock. The analysts explained the downgrade by pointing out that while Huntington Bancshares is a high-quality bank, the recent surge in the regional banking sector makes it difficult to justify maintaining an Outperform rating.
The analysts acknowledged the potential for market participants to rotate into banks, noting that such a move could significantly impact regional banks due to their relatively smaller market capitalizations. Despite recognizing that banks are currently cheaper compared to some mega-cap growth stocks, they expressed concern that most regional banks, including Huntington, are now fairly or fully priced on an absolute basis. Given these valuations, the analysts stated that they could not continue to recommend a bullish stance solely based on the relative cheapness of banks compared to the broader equity market, which they believe is at historically high levels.