Fifth Third Bancorp stock maintains Buy rating at Goldman Sachs after mixed quarter

Investing.com - Goldman Sachs has reiterated its Buy rating and $46.00 price target on Fifth Third Bancorp (NASDAQ:FITB), currently trading at $43.05, following what it describes as a "decent quarter and mixed guide." According to InvestingPro data, the stock appears undervalued based on Fair Value calculations, with analyst targets ranging from $41 to $55.

The bank’s pre-provision net revenue (PPNR) was in line with expectations, with higher net interest income offsetting slightly soft fee income and expenses. The higher net interest income was attributed to an interest recovery, though Goldman questioned the quality of this beat. Fifth Third maintains a solid financial foundation, earning a GOOD Financial Health score from InvestingPro, with an impressive 51-year streak of consistent dividend payments.

Credit metrics showed improvement with provisions beating expectations, net charge-offs in line, and an 11% decline in non-performing loans. While average trends were decent, end-of-period loan and deposit trends were mixed, with loans missing expectations due to declining utilization in the second quarter.

Looking forward, Fifth Third’s outlook suggests in-line PPNR for the third quarter, with the implied fourth-quarter guidance pointing to modest upside driven by higher fees and slightly higher net interest income.

Goldman Sachs noted that investor positioning in the stock has improved in recent weeks, potentially raising expectations for the results, and identified loan growth and fee income increases for the remainder of 2025 as key focus areas.

In other recent news, Fifth Third Bancorp reported second-quarter earnings that exceeded analyst expectations, driven by strong loan growth and an improved net interest margin. The bank posted adjusted earnings per share of $0.88, surpassing the analyst estimate of $0.87, while revenue reached $2.25 billion, exceeding the consensus forecast of $2.22 billion. Revenue increased by 8% year-over-year, marking the highest growth rate in over two years. Net interest income rose 8% year-over-year to $1.5 billion, with the net interest margin expanding to 3.12%. Total (EPA:TTEF) loans grew by 5% compared to the second quarter of the previous year. Credit quality metrics showed improvement, with nonperforming assets decreasing 11% sequentially. The bank’s CET1 capital ratio increased by 13 basis points to 10.56%. Citi maintained a Neutral rating and a $47.00 price target for Fifth Third Bancorp, noting a 2-cent core pre-provision net revenue beat and strong net interest income.

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