Last Update03 Oct 25Fair value Increased 3.57%
Analysts have increased their price target for UMB Financial from $133 to $137.75, citing modest improvements in revenue growth, an improving operating environment, and ongoing positive momentum in core business segments.
Analyst Commentary
Recent research notes reveal a predominantly optimistic outlook for UMB Financial, with multiple price target increases and positive commentary surrounding the company’s growth trajectory, operating environment, and earnings estimates. Key takeaways from analysts’ reports are summarized below.
Bullish Takeaways
- Bullish analysts have lifted price targets on UMB Financial, highlighting sustained momentum in legacy business segments and overall core operations.
- Upward revisions to 2026 operating earnings per share reflect expectations for modestly improved growth, particularly as Heartland moves from contraction to expansion.
- Improving loan growth and a more favorable economic outlook support the case for expanding valuations across regional banks. UMB is viewed as benefiting from these sector-wide trends.
- The regulatory environment is described as increasingly favorable, with deregulation noted as contributing to enhanced profitability and potential for strategic opportunities such as smaller-scale mergers and acquisitions.
Bearish Takeaways
- Although momentum is positive, valuation concerns persist as price targets approach historically high multiples compared to peers.
- Some analysts caution that continued earnings growth will require consistent execution in the context of still-evolving regulatory and economic conditions.
- There is ongoing uncertainty regarding the pace and sustainability of improvements in loan growth, especially in a competitive regional banking landscape.
What's in the News
- Reported net charge-offs for the second quarter ended June 30, 2025, totaling $15.5 million, or 0.17% of average loans. This amount decreased from $35.9 million in the previous quarter and increased from $2.9 million year-over-year (Key Developments).
- Charge-offs related to loans acquired from HTLF were $6.5 million for Q2 2025, compared to $29.7 million in Q1 2025 (Key Developments).
- No shares were repurchased under the buyback program for the periods between April 1 and June 30, 2025 (Key Developments).
Valuation Changes
- Consensus Analyst Price Target increased from $133 to $137.75, reflecting a modestly higher valuation outlook.
- Discount Rate edged up slightly from 6.83% to 6.83%, indicating minimal change in perceived risk.
- Revenue Growth assumption decreased marginally, moving from 19.16% to 19.15%.
- Net Profit Margin declined from 36.58% to 35.58%, pointing to slightly lower projected profitability.
- Future P/E ratio rose from 12.50x to 13.31x, suggesting slightly more optimistic future earnings expectations relative to price.
Key Takeaways
- Integration of Heartland and investment in technology are driving cost savings, operational efficiency, and improved margins.
- Strong loan, deposit, and fee-based service growth outpaces peers, supporting revenue diversification and long-term stability.
- Regional concentration, integration risks, high legacy costs, volatile income sources, and rising competition could constrain efficiency, suppress earnings, and dampen long-term growth prospects.
Catalysts
About UMB Financial- Operates as the bank holding company that provides banking services and asset servicing in the United States and internationally.
- The successful integration of the Heartland (HTLF) acquisition, including vendor consolidation and conversion to the UMB platform, is expected to unlock substantial cost savings ($124 million targeted, most of which will be realized by early 2026), which should materially improve operating leverage and expand net margins.
- UMB continues to benefit from robust loan and deposit growth-driven by strategic expansion in high-growth Midwest and Southwest markets and an expanded branch network-outpacing regional peers and supporting long-term revenue and earnings growth.
- Strong momentum in non-interest income businesses, particularly fund services and asset servicing (with several new institutional clients and assets under administration surpassing $600 billion), positions the company to capitalize on growing demand for fee-based financial solutions, bolstering both revenue diversification and earnings stability.
- Ongoing investment in technology, evidenced by the smooth initial conversion of Heartland's Minnesota franchise and build-out of digital capabilities, enhances operational efficiency and customer experience, supporting improved net margin and long-term client retention.
- Management's proven track record of conservative risk management and superior credit quality, with charge-offs and nonperforming loan ratios below industry averages, helps limit credit provisions and results in relatively higher and more stable net earnings.
UMB Financial Future Earnings and Revenue Growth
Assumptions
How have these above catalysts been quantified?- Analysts are assuming UMB Financial's revenue will grow by 19.2% annually over the next 3 years.
- Analysts assume that profit margins will increase from 26.9% today to 36.6% in 3 years time.
- Analysts expect earnings to reach $1.2 billion (and earnings per share of $12.86) by about September 2028, up from $524.3 million today.
- In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 12.5x on those 2028 earnings, down from 17.7x today. This future PE is greater than the current PE for the US Banks industry at 11.9x.
- Analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
- To value all of this in today's terms, we will use a discount rate of 6.83%, as per the Simply Wall St company report.
UMB Financial Future Earnings Per Share Growth
Risks
What could happen that would invalidate this narrative?- UMB Financial remains highly concentrated in the Midwest and Plains states; any prolonged economic slowdown or population stagnation in these regions could dampen loan and deposit growth, constraining revenue and earnings expansion relative to more diversified banks.
- The company's acquisition of Heartland (HTLF) introduces integration and execution risk; delays, unexpected costs, or issues in system conversions and portfolio realignment may prevent the full realization of projected cost synergies, potentially keeping expense ratios elevated and suppressing net margins.
- UMB's relatively high legacy cost structure
- including a large physical branch footprint now doubled via Heartland
- may become less efficient as digital adoption accelerates industry-wide, possibly straining operating leverage and lowering net income if branch traffic fails to justify fixed expenses.
- A heavy reliance on sizeable, episodic investment gains (as seen with the Voyager Technologies IPO) and accretion income from acquired portfolios could mask underlying growth trends in core banking fees and interest, risking future volatility in revenue and earnings as these sources normalize.
- Heightened competition in both traditional banking and fee-based businesses from national banks and fintech entrants may exert downward pressure on lending rates and fee income, reducing pricing power and potentially holding back revenue growth and profitability over the long term.
Valuation
How have all the factors above been brought together to estimate a fair value?- The analysts have a consensus price target of $133.0 for UMB Financial based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $150.0, and the most bearish reporting a price target of just $120.0.
- In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $3.3 billion, earnings will come to $1.2 billion, and it would be trading on a PE ratio of 12.5x, assuming you use a discount rate of 6.8%.
- Given the current share price of $122.4, the analyst price target of $133.0 is 8.0% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
- We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.
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Disclaimer
AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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