Truist lifts Regions Financial stock target to $26, holds rating

Published 21/01/2025, 19:48
Truist lifts Regions Financial stock target to $26, holds rating

On Tuesday, Truist Securities adjusted its outlook on Regions Financial Corporation (NYSE:RF)'s stock, raising the price target to $26 from the previous $25, while keeping a Hold rating on the shares. The revision reflects a modest increase based on future earnings projections and market multiples. Currently trading at $24.79 with a P/E ratio of 12.8x, InvestingPro analysis suggests the stock is undervalued, with analyst targets ranging from $22 to $32.

Brian Foran, an analyst at Truist Securities, provided insights into the factors influencing the updated price target. The 2025 estimated earnings per share (EPS) were revised downward by 4%, a decrease of $0.10, settling at $2.24, while the 2026 EPS forecast remains steady at $2.52. The updated price target represents a 4% increase and is based on the anticipated 2026 EPS and a next twelve months (NTM) price-to-earnings (P/E) multiple of 10.5 times.

According to InvestingPro, Regions Financial has maintained dividend payments for 21 consecutive years and currently offers a 4.1% dividend yield, demonstrating strong shareholder returns. For deeper insights into Regions Financial's valuation and financial health metrics, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.

The main elements leading to the revised 2025 EPS include an expectation of higher provision expenses, a reduction in share repurchases for the year, and projected lower revenues.

Despite these adjustments, Truist's estimates for expenses remain largely the same. The firm's projections include a year-over-year growth of 1% in average loans, 3% in net interest income (NII), 3% in fees, and 2% in expenses, aligning with the company's own guidance. Recent financial data shows the company maintaining good financial health, with InvestingPro reporting strong profitability scores and stable cash flow metrics.

Additionally, Truist anticipates a 0.5% increase in 2025 deposits and net charge-offs (NCOs) at 51 basis points (bps), which is slightly above the company's guidance range of 40-50 bps. The revised price target of $26 is approximately 10.5 times Truist's estimated 2026 earnings per share for Regions Financial.

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