Huntington Shares Tumble 5.6% on 2026 NII and 2027 EPS Outlook Cut

Huntington Bancshares shares fell 5.6% after it cut its 2026 net interest income growth outlook to roughly 35% from 39%-43% and reduced implied revenue growth to about 34% from 37%. The bank also lowered its 2027 adjusted EPS target to $1.75-$1.83 from $1.90-$1.93, citing persistently high short-term rates, elevated deposit costs, aggressive loan and deposit pricing, and softer loan production. Fee income remains supportive, with noninterest income expected to grow about 32%, but a flatter NIM and weaker spread-income outlook are expected to constrain results.

Analysis

HBAN’s reset is more consequential for its valuation than the initial selloff suggests because it exposes a weak conversion of balance-sheet growth into spread income. Deposit repricing and loan competition are largely fixed-cost pressures in the near term, while the offsetting fee businesses are more market-sensitive and less dependable as a substitute for recurring NII. With expense growth still elevated, the burden shifts to realizing acquisition synergies and operating leverage; any slippage raises the probability that the revised 2027 earnings range is not the final reset.

The read-through is not uniformly negative for regionals. KEY and CFG appear better positioned to monetize commercial activity and fees without relying on the same degree of NIM expansion, creating scope for relative multiple expansion if their next results validate expense discipline. Conversely, HBAN’s pullback in auto and CRE production can tighten credit availability in Midwest markets, modestly benefiting larger national lenders with lower funding costs, while signaling that volume forecasts across auto-exposed regional banks deserve scrutiny.

Over the next 1-3 months, deposit beta disclosures, loan yields versus funding costs, and commercial real-estate paydown trends matter more than headline loan growth. A renewed decline in front-end yields would provide relief, but would not fully repair the thesis if competitive asset pricing compresses earning-asset yields simultaneously. The contrarian point is that a 5.6% one-day decline may already discount a modest estimate revision; a sustained short requires evidence that expenses or credit losses exceed the revised framework, not merely another weak NII datapoint.

Over 6-18 months, the key fork is whether fee growth becomes durable enough to support a lower-risk earnings mix and justify a recovery in the multiple. That requires observable gains in payment volumes, wealth balances and capital-markets revenue while the efficiency ratio improves; otherwise HBAN remains a lower-quality spread lender in a competitive funding market.

Key Decisions for Investors

• Initiate a 1-3 month pair: long CFG / short HBAN, sized market-neutral. CFG offers cleaner positive estimate-revision potential and expense leverage; target 8-12% relative outperformance. Exit if CFG’s next update cuts NII growth or HBAN demonstrates sequential NIM expansion alongside stable deposit costs.
• Maintain KEY as a tactical long into its next earnings/update only after confirming commercial loan growth is translating into NII rather than lower loan yields. Target 5-8% upside over 1-3 months; stop on a revenue-guide reduction or expense growth above the stated trajectory.
• Avoid adding directional HBAN exposure following the initial gap unless consensus 2027 EPS has reset toward the revised range. For existing longs, reduce on rebounds until quarterly evidence shows positive operating leverage and net charge-offs remain within management’s range.
• Set an alert on short-end Treasury yields and regional-bank deposit-cost commentary. A meaningful front-end rally with stable loan pricing would invalidate the HBAN short leg; persistent high funding costs plus rising CRE-related charge-offs would support extending the CFG/HBAN pair to 6 months.