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On Monday, Keefe, Bruyette & Woods updated their outlook on Fifth Third Bancorp (NASDAQ:FITB), increasing the price target to $41 from the previous $40, while maintaining a Market Perform rating on the stock.
The adjustment follows the company's recent earnings report, which revealed a core earnings per share (EPS) of $0.87. This figure slightly surpassed the $0.86 estimate by Keefe, Bruyette & Woods and the consensus estimate of $0.85.
The earnings report showed that Fifth Third Bancorp's net interest income (NII) and expenses were modestly lower than expected, resulting in a pre-provision net revenue (PPNR) that aligned with predictions.
The slight EPS beat for the quarter was attributed to a release of reserves.
The firm noted that Fifth Third Bancorp is well-positioned in the near term to benefit from lower interest rates due to the shorter duration of its certificates of deposit (CDs) and the fact that over 60% of its interest-bearing deposits are indexed to short-term rates.
Despite the positive near-term setup, Keefe, Bruyette & Woods reiterated their Market Perform rating, indicating that the stock's current pricing is considered fair.
They pointed out that Fifth Third Bancorp's stock is trading at a 7% premium compared to its peers, which supports their decision to maintain the current rating without an upgrade.
The updated price target suggests a modest increase in the valuation of Fifth Third Bancorp by Keefe, Bruyette & Woods, reflecting the firm's view on the bank's financial performance and market positioning.
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