What Happened?
Shares of regional banking company NBT Bancorp (NASDAQ: NBTB) jumped 4% in the morning session after Piper Sandler upgraded the stock to Overweight from Neutral, setting a price target of $47.
The upgrade came after the regional bank's shares had underperformed, declining 15% year-to-date. Piper Sandler noted this weakness was partly due to selling pressure from shareholders of the recently acquired Evans Bancorp. The research firm also clarified investor concerns about the auto loan market. It emphasized that NBT's indirect auto lending business, which made up about 13% of its loan portfolio, consisted of high-quality loans and had a history of stable returns with minimal losses. This distinguished it from a subprime auto lender that had recently filed for bankruptcy, an event to which NBT had no exposure.
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What Is The Market Telling Us
NBT Bancorp’s shares are not very volatile and have only had 4 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was about 2 months ago when the stock gained 5.4% on the news that the major indices rebounded, as Fed Chair Jerome Powell delivered dovish remarks at the much-awaited Jackson Hole symposium. Powell suggested that with inflation risks moderating and unemployment remaining low, the Federal Reserve might consider a shift in its monetary policy stance, including potential interest rate cuts. This outlook eased market concerns about prolonged high interest rates and their impact on economic growth. The prospect of lower borrowing costs bolstered investor confidence, particularly in sectors that have lagged, leading to a broad rally across the market.
NBT Bancorp is down 12.3% since the beginning of the year, and at $41.36 per share, it is trading 21% below its 52-week high of $52.33 from December 2024. Investors who bought $1,000 worth of NBT Bancorp’s shares 5 years ago would now be looking at an investment worth $1,508.
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