On Thursday, Stephens raised the stock price target for First Horizon National (NYSE: NYSE:FHN) to $20.00 from $18.00, while keeping an Overweight rating on the stock. This adjustment follows First Horizon's reported operating earnings per share (EPS) of $0.42, which surpassed both the consensus estimate of $0.37 and Stephens' projection of $0.38.
The company's core pre-provision net revenue (PPNR) also slightly exceeded expectations, coming in at $335 million compared to the Street's forecast of $330.5 million and Stephens' estimate of $326.5 million.
The company's net interest income (NII) was slightly below the consensus by less than $0.01, but this was offset by stronger core fees, particularly from better-than-expected fixed income results, contributing approximately $0.01 to the EPS. Core expenses were also modestly below expectations by less than $0.01. First Horizon outperformed the consensus by 2.5%.
Looking ahead, Stephens anticipates that the trends observed will persist, with softer NII being compensated by improved fees and expenses. The analyst's fourth-quarter 2024 estimates align with the midpoint of First Horizon's revenue guidance, showing a year-over-year increase of 1.2% compared to the company's range of flat to +1%.
Stephens' expense outlook for the company is at the higher end of First Horizon's forecast, which is between 4% and 6%, predicting a 5.8% year-over-year rise.
Stephens maintains its 2025 EPS estimate of $1.47 for First Horizon, noting potential upside should the company achieve its PPNR growth target. Furthermore, the favorable trends in fees and expenses have led to an increase in the 2026 EPS estimate to $1.80 from $1.75. Consequently, the firm has raised its price target to $20 while reiterating its Overweight rating on the stock.
In other recent news, First Horizon National Corporation has been the subject of an upgrade by Citi, which raised its target for the bank to $20, citing consistent growth. This adjustment was made following a review of the bank's third-quarter results and end-of-period balance sheet.
First Horizon reported an increase in its third-quarter adjusted earnings per share (EPS) of $0.42, a $0.06 rise from the previous quarter, and its pre-provision net revenue also grew by $11 million.
Citi's analysis suggests that despite potential net interest income weakness until interest rates stabilize, First Horizon's diverse income streams and strong presence in economically growing regions should help sustain its growth. Moreover, the bank's Common equity Tier 1 (CET1) ratio, a key measure of financial strength, improved to 11.2%.
In terms of future expectations, First Horizon's management is anticipating positive growth in adjusted pre-provision net revenue for 2025 and is preparing for the bank to cross the $100 billion asset threshold. However, moderate margin contraction is expected due to loan and deposit repricing.
Lastly, despite robust deposit growth driven by nearly $1 billion in client acquisition, the bank acknowledges that loan growth remains muted due to market factors. These are some of the recent developments at First Horizon Corporation.
InvestingPro Insights
Recent data from InvestingPro adds further context to Stephens' optimistic outlook on First Horizon National (NYSE: FHN). The company's market capitalization stands at $9.25 billion, with a P/E ratio of 12.13, suggesting a relatively attractive valuation compared to some peers in the banking sector. This aligns with Stephens' decision to maintain an Overweight rating on the stock.
InvestingPro Tips highlight that FHN has maintained dividend payments for 14 consecutive years, which may appeal to income-focused investors. Moreover, the stock is trading near its 52-week high, with a significant return of 66.68% over the last year, indicating strong market confidence in the company's performance and future prospects.
However, it is worth noting that 5 analysts have revised their earnings downwards for the upcoming period, which investors should consider alongside Stephens' positive outlook. For a more comprehensive analysis, InvestingPro offers 8 additional tips for FHN, providing a deeper understanding of the company's financial health and market position.
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