Regions Financial stock price target raised to $29 by Stephens on strong Q2

Investing.com - Stephens raised its price target on Regions Financial (NYSE:RF) to $29.00 from $24.00 on Monday, maintaining an Overweight rating following the bank’s second-quarter earnings report. The new target aligns with InvestingPro’s analysis, which indicates the stock is currently undervalued, trading at $26.01 with a P/E ratio of 11.45x.

The $23.38 billion market cap regional bank reported second-quarter operating earnings per share of $0.60, exceeding consensus estimates by 7%. Regions Financial delivered a return on tangible common equity of 19% and an efficiency ratio of 56% for the quarter. Eight analysts have recently revised their earnings estimates upward, according to InvestingPro data, which offers 12 additional key insights about RF’s performance.

The bank’s total deposit costs declined by 1 basis point to 1.39%, which combined with fixed-asset repricing contributed to a 5% quarter-over-quarter increase in net interest income. Net interest margin expanded by 13 basis points during the period.

Management raised its 2025 net interest income outlook to growth of 3%-5% and indicated that net interest margin has an upward bias into 2026. Loan pipelines were up 17% year-over-year at quarter-end, while both non-performing loans and net charge-offs declined during the second quarter.

Stephens projects Regions Financial will deliver a peer-leading return on tangible common equity of approximately 18% in 2025, supporting the higher price target.

In other recent news, Regions Financial Corporation reported robust earnings for the second quarter of 2024, surpassing analyst expectations with an earnings per share of $0.60, compared to the forecasted $0.56. The company also reported revenue of $1.91 billion, exceeding the projected $1.86 billion. Following these results, DA Davidson raised its price target for Regions Financial to $29, maintaining a Buy rating, citing the company’s solid performance and improved revenue forecast. Regions Financial’s management has updated its revenue guidance, now expecting to deliver 150 to 250 basis points of pre-provision operating leverage, up from the prior guidance of 50 to 150 basis points. The company also demonstrated strong financial health with a 19% return on tangible common equity and a 5% quarter-over-quarter increase in net interest income. Furthermore, Regions Financial is focusing on technological upgrades and expanding commercial relationships, with plans to hire additional commercial bankers. The company projects stable to modestly increasing loan growth for the full year 2025 and aims to maintain a net interest margin in the low-to-mid 3.60s.

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