UMB Financial (NASDAQ:UMBF) shares fell around 2% intra-day today after the company downgraded from Buy to Neutral by Citi analysts, who also lowered the price target to $127 from $130. Despite a strong operational close to 2024, the analysts remain cautious on UMBF's near-term growth prospects, particularly following its acquisition of Heartland Financial.
Citi acknowledged continued earnings growth at UMBF, but expressed concerns that HTLF’s balance sheet will dilute overall growth and introduce operational and credit risks. The uncertainty surrounding the integration of Heartland raises both growth and credit risk in the short-to-medium term, making valuation expansion less likely until clearer trends emerge over the coming quarters.
As a result, Citi trimmed its earnings estimates and opted for a more neutral stance, awaiting further confirmation that UMBF can successfully navigate its acquisition-related challenges before re-evaluating its rating.
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