Synovus stock target cut to $46 by Stephens, keeps rating

On Monday, Stephens analyst Russel Gunther revised the price target for Synovus Financial (NYSE:SNV) to $46.00, a decrease from the previous $52.00, while reaffirming an Equal Weight rating on the stock. The regional bank, currently valued at $5.75 billion, trades at an attractive P/E ratio of 11.4x. According to InvestingPro data, nine analysts have recently revised their earnings estimates upward for the upcoming period. Gunther’s analysis indicated that Synovus’ core pre-provision net revenue (PPNR) of $265.3 million surpassed consensus estimates by $0.07, driven by a stronger net interest income (NII), which contributed an additional $0.06. This uptick in NII helped to balance out a decline in fees, which detracted $0.04, and was further supported by a reduction in expenses that added $0.05 to the earnings. The company maintains a strong dividend yield of 3.78% and has consistently paid dividends for 52 consecutive years, demonstrating remarkable financial stability.

The updated guidance from Synovus included a lower high end of revenue expectations due to weaker fee income and a more constrained expense growth forecast. These adjustments led to a 1.2% increase in the projected PPNR for 2025 at the midpoint ranges. Despite these changes, the revised PPNR outlook remains approximately 1% below the midpoint of the new guidance. The analyst noted that a better-than-anticipated net interest margin (NIM) is projected to remain stable at current levels, even with the inclusion of four anticipated rate cuts in the guidance.

The lowered expense guidance is not expected to influence the company’s plans for hiring revenue producers. Gunther’s projections for 2025 now suggest a modest positive operating leverage. The analyst concluded by reiterating the 2026 estimates and related PPNR, while maintaining the Equal Weight rating for Synovus Financial. The adjustments reflect a careful consideration of various financial factors, including net interest income, fees, expenses, and net interest margin, as well as the broader economic conditions that could influence rate cuts and hiring strategies. InvestingPro analysis suggests the stock is currently undervalued, with additional insights available in the comprehensive Pro Research Report, which provides deep-dive analysis of 1,400+ top US stocks.

In other recent news, Synovus Financial reported first-quarter 2025 earnings that surpassed expectations, with an earnings per share (EPS) of $1.30, exceeding the forecasted $1.12. Revenue also slightly exceeded projections, coming in at $570.9 million against a forecast of $569.42 million. The company’s net interest margin (NIM) increased by 9 basis points, surpassing forecasts. Analysts from BofA Securities responded by raising the price target for Synovus to $60, maintaining a Buy rating, while DA Davidson also maintained a Buy rating with a $65 price target. Both firms noted the company’s strong quarterly performance and improved credit metrics.

Synovus has adjusted its fiscal year 2025 expense guidance to an increase of 2%-4%, down from a previous forecast of 3%-7%, while maintaining revenue growth expectations between 3%-6%. The company reported a decrease in provisioning expenses, which contributed to the earnings beat. Additionally, Synovus saw a modest growth in end-of-period loans and a 3% increase in core deposits compared to the previous year. The bank’s allowance for credit losses ratio decreased by 3 basis points quarter-over-quarter, indicating improved credit health.

Synovus anticipates loan growth of 3%-5% for 2025 and expects core deposit growth in the same range. The company is preparing for potential economic challenges, including anticipated Federal Reserve rate cuts. Analysts have noted that the financial institution’s recent performance and guidance adjustments suggest a cautiously optimistic view of its growth trajectory and financial stability.

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