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Investing.com - Raymond (NSE:RYMD) James downgraded Synovus Financial (NYSE:SNV) from Outperform to Market Perform on Monday following the company’s recently announced merger with Pinnacle Financial (NASDAQ:PNFP). The $6.89 billion market cap financial institution, which maintains a solid 3.14% dividend yield and trades at 9.5x earnings, has shown resilience with 52 consecutive years of dividend payments according to InvestingPro data.
The downgrade comes after both Synovus and Pinnacle Financial (PNFP) shares fell sharply last week, with SNV dropping 12.5% on Friday and PNFP declining 12.1% on the same day. Pinnacle shares have fallen 21.6% since July 21, following initial reports of the merger. InvestingPro analysis indicates Synovus currently trades below its Fair Value, with a "GOOD" overall financial health score.
Raymond James noted that the deal was "poorly received by investors" and established a 2027 operating EPS estimate for PNFP of $11.00 while updating its earnings estimates to account for the transaction.
The investment firm expects both stocks to remain "fairly range-bound in the short- to intermediate-term" due to elevated integration and cultural risks associated with the merger.
Systems conversion between the two financial institutions is not expected to occur until the first quarter of 2027, according to Raymond James, which acknowledged the discounted valuations might present an attractive entry point for long-term investors who believe in the transaction.
In other recent news, Synovus Financial has been considering strategic options, including a potential merger, following interest from other parties. Sources indicate that the bank has engaged a financial adviser and has entered merger discussions with at least one competitor. Alongside these developments, Synovus Financial’s strong quarterly loan growth has led Citi to raise its price target on the bank to $65, maintaining a Buy rating. Raymond James also upgraded Synovus Financial from Market Perform to Outperform after the company’s second-quarter results exceeded forecasts and consensus estimates. Keefe, Bruyette & Woods followed suit by upgrading the stock to Outperform, citing better-than-expected performance in fees and loan loss provisions. DA Davidson raised its price target to $63, highlighting the bank’s improved 2025 earnings outlook, increasing their earnings per share estimate from $5.17 to $5.50. These updates reflect a period of significant activity and positive assessments for Synovus Financial.
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