BOK Financial Corporation (BOKF) Gets a Buy Rating as Analyst Sees Strong Outlook Amid Rate Cuts
D.A. Davidson analyst Peter J. Winter has upgraded BOK Financial Corporation (BOKF) to Buy from Neutral, signaling a positive outlook for the regional banking giant. Winter’s bullish stance is driven by his belief that BOKF is well-positioned to thrive in a declining interest rate environment, a trend that has become increasingly evident in recent months.
The analyst’s upgrade is based on several key factors. First, Winter expects BOKF to benefit from a high interest-bearing deposit beta. This essentially means that the company’s deposits are more sensitive to interest rate changes, allowing it to potentially generate more interest income even as rates decline. Second, Winter highlights BOKF’s diverse fee income sources, which comprise approximately 40% of its revenue. This diversification makes BOKF less reliant on interest income, providing a crucial buffer against potential headwinds in a lower interest rate environment.
Furthermore, Winter notes that BOKF’s loan-to-deposit ratio is currently below its peers, indicating a strong capital position. This allows BOKF to potentially take on more loans, further boosting its earnings potential.
In light of these positive factors, Winter has raised his price target for BOKF to $124, reflecting his confidence in the company’s future performance. Additionally, he has upgraded his earnings per share (EPS) estimates for the second half of 2024 and 2025, projecting strong earnings growth for the bank.
BOKF’s recent performance has also been positive. The company lowered its revenue outlook in July due to expectations of fewer rate cuts, but the recent 50 basis point cut in September and signs of further reductions have fueled optimism about its future revenue prospects. With a robust credit outlook and a relatively low provision expense, BOKF is poised to deliver solid financial results in the near future.
Investors looking for exposure to the regional banking sector can consider the Invesco KBW Regional Banking ETF (KBWR), which offers a diversified portfolio of regional banks, including BOKF.
The upgrade to Buy and the raised price target are strong indicators of the analyst’s confidence in BOKF’s ability to navigate the evolving interest rate landscape and deliver shareholder value. This optimistic outlook could attract increased investor interest in BOKF, potentially driving its stock price higher in the coming months.