Huntington Bancshares stock falls on lowered guidance outlook

Huntington Bancshares cut its fiscal 2027 EPS outlook to $1.75-$1.83 from $1.90-$1.93 and reduced projected 2026 net interest income growth to about 35% from 39%-43%, sending shares down 3%. Management cited higher short-term rates and intensified loan and deposit pricing competition constraining net interest margin expansion, while lowering implied revenue growth to roughly 34% from 37%. The bank maintained approximately 36% loan-growth expectations, raised fee-income growth guidance to 32%, and plans to increase share repurchases to $1.3B-$1.4B.

Analysis

The key issue is not the initial estimate reset but the implied durability of deposit competition. If funding costs remain sticky while asset yields reprice more slowly, HBAN's earnings leverage to eventual Fed easing is weaker than peers with larger noninterest-bearing deposit bases or more diversified fee pools. That dynamic can keep forward EPS revisions negative for the next 1-3 months, even if credit quality remains stable.

The enlarged repurchase program limits near-term downside but is not a clean offset to operating de-rating: buybacks support per-share earnings only if executed below intrinsic value and without constraining balance-sheet flexibility. The market will likely test whether capital returns are masking weaker pre-provision profitability; quarterly net interest margin, deposit beta and expense-to-revenue progression are the decisive datapoints. A further downward revision to 2027 NII or an increase in deposit costs would likely drive another valuation-leg lower.

Consensus may be too quick to extrapolate this pressure across all regionals. Scale, deposit mix, securities-book duration and fee-income penetration create meaningful dispersion: JPM and PNC should be relatively insulated, while similarly commercial-heavy Midwest banks could face comparable pricing pressure. Over 6-18 months, a lower-rate curve could restore asset sensitivity, but only if competitive deposit pricing normalizes rather than simply resetting at a lower absolute level.

Key Decisions for Investors

• Initiate a 1-3 month pair: short HBAN / long PNC, sized beta-neutral. The trade isolates deposit-cost and NIM execution risk while retaining regional-bank exposure; target 8-12% relative downside for HBAN. Cover if HBAN reports sequential NIM expansion with stable deposit costs or if the pair underperforms by 7%.
• Avoid adding outright HBAN on the initial decline until sell-side 2027 EPS estimates and the stock's implied buyback yield are updated. Set an alert for post-revision consensus EPS declining less than 3%; that would indicate the company reset expectations adequately and removes the short catalyst.
• For broad financial exposure, favor JPM over KRE for the next quarter. Large-bank fee diversification and funding scale should outperform if deposit competition persists; reverse the preference if the Fed cuts faster than expected and KRE begins to outperform JPM by more than 10% on improving loan-growth expectations.
• Watch quarterly deposit beta, net interest margin and reserve build as the falsification dashboard. A meaningful acceleration in deposits without incremental pricing, or sustained fee-income outperformance sufficient to offset lost NII, would support closing the HBAN underweight.