Huntington Bancorp Looking More Undervalued, But Still Driver-Poor

When I last wrote about Huntington Bancorp (HBAN), I damned it with the faint praise that although it is a high-quality bank that was trading at a double-digit discount to fair value, I saw no real positive catalysts that would shrink that valuation discount. Seven months later, the shares have barely moved on a net basis (they were up as much as 17% at one point), lagging the broader peer group by around 5% and weakening significantly since earnings.

I didn’t really think the earnings or guidance were that bad, but it brings back that earlier point – what’s going to get investors to reconsider these shares and shrink that valuation gap? I think Huntington will have a relatively better run when it comes to pre-provision profits, and those deposit repricing opportunities will certainly help, but investors are going to need to be patient here. I do see risk from a “it’s going down, so sell it/avoid it” trend, but with the discount to fair value close to 15%, I’m getting more bullish on this as a “it doesn’t deserve to be this cheap” trade.

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Huntington Bancorp Looking More Undervalued, But Still Driver-Poor