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Investing.com - Stephens downgraded Pinnacle Financial Partners (NASDAQ:PNFP) from Overweight to Equal Weight on Friday, setting a price target of $133.00 following the company’s pending all-stock acquisition deal. With a current market capitalization of $8 billion and trading at a P/E ratio of 13.9x, InvestingPro analysis suggests the stock is currently undervalued.
The downgrade comes as Pinnacle Financial’s stock has already declined more than 10% since rumors emerged about the potential sale of Synovus Financial (NYSE:SNV), the target company in the acquisition. According to InvestingPro data, the stock has seen an 11% decline in the past week, though it maintains a positive 8.4% return over the past year.
Stephens cited heightened execution risk in its downgrade rationale, specifically pointing to challenges in transitioning Pinnacle’s business model and integrating Synovus into its corporate culture.
The firm also expressed concerns about regulatory and capital requirements, as the combined entity would create a $116 billion asset, Category IV bank, with regulatory and capital relief details not yet finalized.
While Pinnacle’s management projects approximately 21% earnings per share accretion by 2027 and expects to recover the roughly 9% tangible book value dilution within 2.6 years, Stephens believes these benefits will take time to materialize.
In other recent news, Pinnacle Financial Partners reported second-quarter earnings that surpassed analyst expectations, with earnings per share rising nearly 23% year-over-year. The bank posted earnings of $2.00 per diluted share, beating the consensus estimate of $1.91 per share. Revenue for the quarter reached $505 million, exceeding the anticipated $498.64 million. This performance was attributed to strong loan growth and an expanding net interest margin. Piper Sandler maintained its Neutral rating on Pinnacle Financial Partners, setting a price target of $110.00, despite the earnings beat. The firm noted higher fees and increased net interest income as positive factors, although higher expenses from increased incentive compensation were noted. Meanwhile, Citi raised its price target for Pinnacle Financial Partners to $140.00, maintaining a Buy rating. Citi highlighted Pinnacle’s strong loan growth and hiring trends as key factors for future growth. These developments provide investors with a detailed view of Pinnacle Financial Partners’ recent performance and outlook.
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