PNC Financial stock rating downgraded by Wolfe Research on valuation concerns

Investing.com - Wolfe Research downgraded PNC Financial (NYSE:PNC) from Outperform to Peerperform on Thursday, citing valuation concerns relative to other banks in its coverage universe. The $77.42 billion bank currently trades at a P/E ratio of 13.81, with InvestingPro data indicating the stock is in overbought territory based on RSI indicators.

The research firm indicated that PNC shows "relatively less upside torque" compared to other Outperform-rated banks that generate higher returns. Wolfe Research established a year-end 2026 fair value range of $173-228 for PNC shares. According to InvestingPro’s comprehensive analysis, which includes 8 additional key insights available to subscribers, the stock appears overvalued at current levels.

The downgrade comes with a reduced recession outlook, with Wolfe Research now contemplating a 20% probability of recession versus its previous 40% estimate. This adjusted economic outlook factors into the firm’s valuation model for the bank, even as PNC maintains a solid 3.27% dividend yield and has raised dividends for 14 consecutive years.

Despite the rating change to a more neutral stance, Wolfe Research acknowledged PNC’s strengths, noting that it "operates a premier, low loss content commercial lending franchise." The firm maintained a positive view on PNC’s fundamental business operations.

Wolfe Research projects PNC will deliver low double-digit annual earnings per share growth through 2027, suggesting continued solid financial performance despite the valuation concerns that prompted the downgrade.

In other recent news, PNC Financial Services Group has announced its plans to increase its quarterly cash dividend by 6%, raising it to $1.70 per share in the third quarter of 2025, following favorable results from the Federal Reserve’s stress test. The bank’s Common Equity Tier 1 ratio stands at 10.6%, significantly above the regulatory minimum. In terms of analyst evaluations, RBC Capital has adjusted its price target for PNC Financial to $195, maintaining an Outperform rating, while Keefe, Bruyette & Woods lowered their target to $185, keeping an Underperform rating. PNC’s recent earnings report showed net interest income exceeding expectations, although core fee income fell short. Despite this, the bank has maintained its full-year earnings guidance, supported by stronger than anticipated loan growth. Additionally, PNC Bank has launched a mobile payment solution, PNC Mobile Accept, aimed at small businesses, allowing them to process card payments directly through the PNC Mobile Banking App. Furthermore, PNC Financial has reported that COO E William Parsley III will step down, transitioning to an Executive Advisor role until the end of 2025. These developments reflect PNC’s ongoing strategic initiatives and market positioning.

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