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On Friday, Raymond (NS:RYMD) James analyst Michael Rose increased the price target on Truist Financial Corporation (NYSE:NYSE:TFC), a $63.26 billion financial institution known for maintaining dividend payments for 52 consecutive years, to $53.00, up from the previous $51.00, while reiterating an Outperform rating for the stock.
This adjustment follows the company's fourth-quarter earnings, which surpassed both Raymond James' and consensus estimates. The improved forecast for 2025 suggests positive operating leverage, prompting an uplift in earnings per share (EPS) projections. According to InvestingPro, net income is expected to grow this year, with analysts predicting a return to profitability.
Truist Financial's recent performance was bolstered by stronger-than-expected loan and average earning asset (AEA) growth. Additionally, the net interest margin (NIM) matched consensus predictions, contributing to a rise in net interest income (NII).
The company also reported core fee income that exceeded both Raymond James' and consensus forecasts. Deposit growth outpaced projections, and the nonperforming loan (NPL) ratio saw a slight decline. InvestingPro's comprehensive analysis shows the company maintains a FAIR overall financial health score of 2.16, with particularly strong ratings in relative value and price momentum.
However, Truist Financial's earnings per share were impacted by a higher loan loss provision, attributed in part to the robust loan growth. Core noninterest expenses were higher than Raymond James had anticipated, although they aligned with the general consensus. The company experienced a slight decrease in capital ratios and a 2.1% drop in tangible book value (TBV) to $30.01.
Despite these challenges, Truist Financial's stock is trading higher today, with a notable year-to-date return of 3.69% and an impressive one-year total return of 32.37%, as investor confidence grows regarding the company's potential to achieve a mid-teens return on tangible common equity (ROTCE) over the medium term.
This optimism is driven by continued momentum in fee-based income, loan growth—which may be understated depending on economic conditions—and stringent expense control. The stock currently offers an attractive dividend yield of 4.62%, and InvestingPro analysis suggests the stock is trading near its Fair Value.
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