Atlantic Union Bankshares (AUB) faces downside risk to consensus earnings estimates amid weaker loan-growth projections, faltering industry-wide demand, and an uncertain macro backdrop as the bank diversifies its portfolio toward the commercial and industrial segment, Morgan Stanley said in a Wednesday report.
The regional bank has a strong credit quality and total loan losses should outperform peers this year and in 2026, according to the brokerage.
While higher commercial loan paydowns are a tailwind for credit quality, the trend could oppose loan growth, the analysts noted, adding that fewer commercial real estate originations and risks from fiscal policy changes could further dampen the company's outlook.
The brokerage said it models a "48% end-of-period loan growth" in 2025 and a 3.84% net interest margin for Q4, considering the impact of the Sandy Spring acquisition.
Morgan Stanley said it initiated coverage of the stock with an equalweight rating and a price target of $32 per share.
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