M&T Bank To Outperform Peers, Analyst Says: 'Overhang Fears Could Erode Over Next Several Quarters'

M&T Bank Corp MTB is gearing up to report results in early October, after having reported upbeat earnings for the second quarter.

The U.S. Federal Reserve cutting its benchmark interest rates could be a catalyst for the company's credit metrics and drive stronger earnings growth, according to JPMorgan analyst Steven Alexopoulos.

The M&T Bank Thesis: Alexopoulos upgraded the rating for M&T Bank from Neutral to Overweight, while raising the price target from $183 to $215.

While there are currently "several overhangs on the stock," a recent meeting with CFO Daryl Bible indicates that these fears could "erode considerably" over the next several quarters, triggering an outperformance of the bank's shares, Alexopoulos said in the upgrade note.

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The Fed lowering rates could be "a catalyst to drive improved credit metrics at MTB," the analyst stated. The lower rates could also be an "opportunity for the company to demonstrate NIM neutrality to the markets as it relates to short-term rate moves," he added.

"Once the company is able to demonstrate a stable NIM in the backdrop of reduced short-term rates while its credit metrics are concurrently improving, we believe this will quickly set the stage for bottom-line EPS expectations to improve (and potentially dramatically) as not only required provision expense declines but this also sets the stage for the company to announce a much larger buyback in 2025," Alexopoulos further wrote.

MTB Price Action: Shares of M&T Bank had risen by 0.16% to $171.04 at the time of publication on Tuesday.

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