On Friday, Piper Sandler adjusted its outlook on Synovus Financial (NYSE:NYSE:SNV), reducing the price target from $46.00 to $42.00 while retaining an Overweight rating on the shares.
The revision follows the company's first-quarter results, which fell short of expectations, prompting a reassessment of future earnings. The firm's analysts have revised their 2024 earnings estimate to $3.70, a significant decrease from the prior forecast. However, the 2025 earnings projection has been modestly reduced to $4.40, approximately 4% lower than the previous estimate.
The adjustment in price target and earnings estimates is attributed to the first-quarter performance and anticipated near-term revenue pressures. Piper Sandler emphasized that the current estimates do not factor in potential benefits from the bank's Risk-Weighted Assets (RWA) optimization efforts, which might provide Synovus with an additional $100 million to $200 million in excess capital for deployment.
In the wake of these revised expectations, Piper Sandler has also altered the price-to-earnings (P/E) multiple for Synovus Financial, bringing it down from 10x to 9.5x. The firm suggests that it might take several quarters of consistent financial results for investor confidence to fully rebound in the SNV narrative.
Despite the lowered price target and earnings estimates, Piper Sandler continues to view Synovus Financial as an undervalued stock. They believe that the company is positioned to experience a favorable earnings trajectory, especially in an environment where interest rates are expected to remain elevated for an extended period.
InvestingPro Insights
Following Piper Sandler's revised outlook on Synovus Financial, InvestingPro data and tips provide additional context for investors considering the company's stock. The P/E ratio for Synovus currently stands at 11.8, with a slight adjustment to 11.4 when considering the last twelve months as of Q1 2024. This aligns with Piper Sandler's adjustment of the price-to-earnings multiple. Despite a recent downturn in revenue growth, reporting a -12.67% change over the last twelve months as of Q1 2024, Synovus has maintained a strong operating income margin of 39.12% in the same period. Moreover, the dividend yield as of March 2024 is notable at 4.48%, underlining the company's commitment to returning value to shareholders, with a history of 51 consecutive years of dividend payments, as highlighted in the InvestingPro Tips.
InvestingPro Tips also reveal that analysts have recently upgraded their earnings projections for Synovus, indicating a potential positive shift in expectations. Additionally, the stock's RSI suggests it is in oversold territory, which could interest value investors looking for a rebound opportunity. With a significant price increase over the last six months, despite recent declines, the stock's volatility may present opportunities for strategic investors.
For those seeking a deeper dive into Synovus Financial's performance and potential, InvestingPro offers additional tips on the company. To access these insights and for further analysis, visit https://www.investing.com/pro/SNV. Moreover, readers can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking a wealth of information to inform investment decisions.
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