On Tuesday, Keefe, Bruyette & Woods updated their outlook on shares of Truist Financial (NYSE:TFC), increasing the price target to $48.00, up from the previous target of $46.00. The firm has sustained its Outperform rating on the stock following Truist Financial's recent earnings report.
The bank reported a robust quarter, surpassing expectations with a $0.06 per share beat on pre-provision net revenue (PPNR). This outperformance was attributed to a combination of stronger net interest income (NII) and reduced expenses.
A key highlight from the report was the Common Equity Tier 1 (CET1) capital ratio, which stood at 11.6%. Additionally, the tangible book value (TBV) saw a significant increase of nearly 34% following the sale of Truist Insurance Holdings (TIH).
The analyst from Keefe, Bruyette & Woods noted that despite recent valuation improvements within the super-regional bank group, Truist Financial's stock is still appealing. This is due to its balance sheet flexibility, which is bolstered by excess liquidity and capital, along with a modestly liability-sensitive balance sheet.
Moreover, the company has been experiencing positive momentum in its fee income businesses, particularly in Capital markets and Wealth management.
Currently, Truist Financial's stock is trading at a 5% discount based on earnings and a 14% discount on forward TBV. The analyst believes that even after accounting for balance sheet restructuring, Truist Financial is still under-earning, considering its low-yielding held-to-maturity (HTM) book.
Consequently, the firm has revised its estimates and price target for the bank's shares.
In other recent news, Truist Financial Corporation reported a robust second quarter in 2024, characterized by growth and a digital push. The company posted adjusted earnings of $1.2 billion, translating to $0.91 per share, and a 3% rise in adjusted revenue.
Truist also reported a 4.5% increase in net interest income, underscoring its financial progress.
In a significant development, Truist completed the sale of its stake in Truist Insurance Holdings and authorized a $5 billion share repurchase program. The company's CEO, William Rogers (NYSE:ROG), highlighted the firm's focus on growing client relationships, maintaining expense discipline, and enhancing digital capabilities through the T3 platform.
These recent developments also include Truist's expectations for loan balances to stabilize in the third quarter and plans to repurchase $500 million of shares per quarter.
The company's CET1 ratio improved to 11.6%, indicating a healthier financial status. Lastly, Truist expects revenue to increase and expenses to grow by 3% due to strategic investments in the third quarter of 2024.
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