On Thursday, Piper Sandler adjusted its stance on Pinnacle Financial Partners (NASDAQ:PNFP), trading on NASDAQ:PNFP, shifting the bank's stock rating from Overweight to Neutral. The firm also altered the price target to $98.00, an increase from the previous target of $95.00.
The adjustment comes amid expectations of limited near-term growth potential for the regional bank. The new price target suggests a modest 4% increase from the current levels, pegging the valuation at approximately 12.5 times the firm's estimated 2025 earnings, slightly up from the prior multiple of 12.
Piper Sandler's decision reflects a conservative outlook on Pinnacle Financial Partners' performance over the next year. Despite acknowledging the bank's historically strong growth and its consistent outperformance over one, three, and five-year periods, the firm anticipates a plateau in the stock's trajectory. The bank's shares have already seen a significant surge, rising over 24% in the past month.
The revised earnings estimates for 2025 have been set at $7.85, a slight decrease from the earlier forecast of $7.90. This adjustment is based on projections slightly below the company's 2024 net interest income (NII) guidance.
However, Pinnacle Financial Partners is still expected to exhibit year-over-year NII growth in 2024, with further improvement anticipated in 2025, bolstered by robust new hire activity.
Piper Sandler's analysis concludes with a recognition of Pinnacle Financial Partners' high-quality growth and its history of rewarding investors. Nonetheless, the firm's current valuation is deemed fair, reflecting a projected return on equity of around 9%.
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