On Thursday, Keefe, Bruyette & Woods announced an adjustment to its stock price target for First Horizon National (NYSE:FHN). The firm's analyst has increased the target to $24.00, up from the previous $23.00, while keeping a Market Perform rating on the stock.
The adjustment follows a review of First Horizon's intra-quarter update provided last week. The analyst noted that the update has led to a 6% increase in the estimated earnings for the years 2025 and 2026.
The revision is primarily due to an anticipated increase in stock buybacks and a reduction in credit costs for the company. InvestingPro subscribers can access detailed financial metrics showing the company's strong YTD return of 40% and consistent dividend payments maintained for 14 consecutive years.
First Horizon's stock is currently trading in alignment with the Bank Index (BKX) based on the 2025 and 2026 earnings estimates, at 12 times and 11 times earnings, respectively. This represents a roughly 10% premium compared to its trading position in 2018.
The analyst attributes this premium to market expectations that interest rates will remain elevated for a more extended period. Moreover, there is an anticipation of a more dynamic mergers and acquisitions (M&A) environment under the potential administration dubbed "Trump 2.0."
The firm maintains its Market Perform rating on First Horizon National, indicating that the stock is expected to perform on par with the broader market or its sector in the near future.
In other recent news, First Horizon National received multiple upgrades from financial analysts following its strong third-quarter earnings report. RBC (TSX:RY) Capital raised its target price for the company from $19 to $20, while Baird increased its target from $16 to $17, both firms maintaining their positive ratings.
Stephens also increased its target price from $18 to $20, keeping an Overweight rating, and Citi raised its target from $19 to $20, maintaining a Buy rating. The analysts highlighted First Horizon's robust third-quarter earnings, which exceeded expectations with an earnings per share (EPS) of $0.42, a $0.06 increase from the previous quarter. The company's pre-provision net revenue also saw a rise of $11 million.
These firms noted First Horizon's ability to offset net interest income pressures with strong fee income and fixed-income trading activities, as well as the company's effective control over core expenses and favorable credit metrics.
At a recent investor conference, First Horizon shared its financial outlook for the fiscal year 2025, which includes expectations for adjusted revenues to remain steady or rise up to 4%, and adjusted expenses to grow between 2% and 4%.
The company also anticipates net charge-offs ranging from 15 to 25 basis points, a tax rate of 21% to 23%, and a Common Equity Tier 1 (CET1) ratio to decrease to between 10.5% and 11.0%.
In light of these developments, First Horizon's management is preparing for the company to cross the $100 billion asset threshold while maintaining an 11% CET1 ratio. However, it acknowledges that loan growth remains muted due to market factors. These are the recent developments at First Horizon Corporation.
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