On Thursday, Baird made an adjustment to the price target for First Horizon National (NYSE:FHN) shares, increasing it to $16.00 from the previous $15.00, while keeping a Neutral stance on the stock.
The adjustment followed First Horizon's reported earnings per share (EPS) of $0.33 for the first quarter of 2024, which aligned with expectations. The results revealed higher-than-anticipated fees, which were somewhat balanced by weaker credit trends, including charge-offs and provisions.
The earnings report highlighted that First Horizon might have moved beyond its peak non-interest income challenges. Baird anticipates that the bank will see continued net interest income (NII) growth, contingent upon several factors such as the rate cuts frequency and timing, changes in deposit mix and cost, as well as loan growth dynamics.
First Horizon's proactive measures during the quarter were noted, including its accelerated share buybacks, which accounted for nearly 25% of the authorized amount. Moreover, the company raised its guidance. However, the increase in the fee outlook did not meet Baird's projections.
While acknowledging the bank's effective execution of its current strategies, Baird suggested that the risk/reward profile for First Horizon's stock appears to be moderate, especially after its recent strong performance. The firm indicated a preference for other regional banks that might offer more substantial upside potential.
InvestingPro Insights
First Horizon National's (NYSE:FHN) recent earnings report and the subsequent price target increase by Baird reflect a company navigating through market challenges with strategic measures. To further understand the investment potential of First Horizon, InvestingPro data and tips offer additional insights. The company's P/E ratio stands at a modest 9.67, suggesting relative undervaluation compared to some industry peers. Moreover, the company has shown resilience with a Price / Book ratio of 0.93 as of the last twelve months, indicating that the stock may be trading at a discount to its book value.
On the dividends front, First Horizon has a commendable track record, maintaining dividend payments for 14 consecutive years, with a current yield of 4.23%. This consistency is a testament to the company's commitment to shareholder returns. Additionally, analysts have shown confidence in the company's profitability, revising their earnings upwards for the upcoming period and predicting profitability for the year. Notably, First Horizon has been profitable over the last twelve months, which aligns with the positive sentiment.
For investors seeking more detailed analysis, InvestingPro provides an array of tips and metrics. There are additional InvestingPro Tips available that delve into the company's financial health and market performance. For instance, while the company has experienced a large price uptick over the last six months, registering a 30.71% price total return, it's important to consider the broader context, such as the recent dip in revenue growth. Prospective investors can explore these nuanced insights with an exclusive offer: use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro.
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