On Monday, Seaport Global Securities analyst Laurie Havenar Husicker upgraded HarborOne Bancorp (NASDAQ:HONE) stock rating from Neutral to Buy and set a new price target of $16.00. The upgrade follows the announcement that East Boston Savings Bank (EBC) will acquire HarborOne, an event Husicker described as beneficial for both institutions. Currently trading at $10.06 with a market capitalization of $438 million, InvestingPro analysis suggests the stock is undervalued, with analyst targets ranging from $12 to $14.
The analyst expressed surprise at the timing of the acquisition, noting the current weaker market conditions for mergers and acquisitions (M&A) and deal pricing. However, Husicker acknowledged that HarborOne’s decision to sell at book value to a larger and financially stronger bank like EBC is a strategic move, especially under the shadow of potential global economic challenges spurred by recent tariff policies.
The ongoing trade tensions and tariffs, which some fear could lead to a global recession, have created uncertainty in equity and bond markets. Banks are particularly vulnerable to these economic pressures. In this context, Husicker highlighted EBC’s strong position, with substantial capital, liquidity, and reserves, making it a solid choice for HarborOne in the event of a credit cycle.
Due to the impending merger, Husicker has revised the fiscal year 2025 earnings estimate for HarborOne to $0.70 from the previous $0.84 and the fiscal year 2026 earnings estimate to $0.81 from $0.98. While analysts anticipate a sales decline in the current year, the company maintains profitability with a P/E ratio of 16.08. The positive outlook on the merger and the revised financial projections have contributed to the analyst’s decision to raise the stock rating and price target for HarborOne Bancorp.
In other recent news, HarborOne Bancorp reported first-quarter earnings that did not meet analyst expectations. The company posted a net income of $5.5 million, or $0.14 per diluted share, falling short of the consensus estimate of $0.18 per share. Revenue for the quarter was $41.36 million, below the anticipated $44.22 million. A significant factor in the earnings decline was a $2.9 million drop in mortgage banking income. Despite these challenges, HarborOne Bancorp saw growth in commercial and industrial loans and a decrease in deposit costs. The net interest margin improved slightly to 2.39%, although net interest income saw a decrease of $358,000, totaling $31.5 million. The company increased its quarterly dividend by 12.5% and repurchased 513,855 shares. Additionally, there was an 11.8% year-over-year increase in residential mortgage loan closings, despite high mortgage rates.
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