RBC Capital Markets has adjusted its outlook for First Horizon (NYSE:FHN) National Corporation (NYSE: FHN), raising its price target to $20 from $19 while maintaining an Outperform rating on the stock.
The revision follows the company's third-quarter results, which were seen as a testament to the robustness of First Horizon's diversified business model.
The bank's performance in the third quarter was marked by a mix of headwinds and strengths. Despite pressures on net interest income (NII) and the net interest margin (NIM) due to the prevailing rate environment and rising deposit costs, First Horizon's fee income and fixed-income trading activities provided strong counterbalances. The firm also noted that core expenses were kept under control, credit metrics appeared favorable, and the stock buyback program continued to be active.
First Horizon's outlook does anticipate ongoing margin challenges in the near term. However, RBC Capital highlighted a modest positive trend in revenue projections, buoyed by the momentum in fee-based income. This optimistic view on revenue has led to the adjusted price target, reflecting confidence in the bank's capacity to navigate the current financial landscape.
The analyst's statement underscored the solid quarter for First Horizon, emphasizing the company's ability to offset certain adverse conditions with its strengths in other areas. "Although the outlook does call for continued margin headwinds in the near-term, we see a modest positive bias to revenues given the fee momentum," the analyst remarked, indicating a finely-tuned approach to the bank's estimates and price target going forward.
InvestingPro Insights
First Horizon National Corporation's recent performance aligns with several key metrics and insights from InvestingPro. The company's market cap stands at $9.25 billion, with a P/E ratio of 12.13, indicating a relatively modest valuation compared to its earnings. This valuation metric complements RBC Capital's optimistic outlook and increased price target.
InvestingPro Tips highlight that First Horizon has maintained dividend payments for 14 consecutive years, demonstrating financial stability and commitment to shareholder returns. This consistency in dividends is particularly noteworthy given the challenging interest rate environment mentioned in the article.
Additionally, the company has shown a significant return over the last week and is trading near its 52-week high, with a 66.68% price total return over the past year. These metrics support the article's positive sentiment and RBC Capital's decision to raise the price target.
It's worth noting that while First Horizon faces challenges such as weak gross profit margins, it remains profitable over the last twelve months, with analysts predicting continued profitability this year. This aligns with the article's discussion of the bank's ability to offset headwinds with strengths in other areas of its business.
For investors seeking a more comprehensive analysis, InvestingPro offers 5 additional tips that could provide further insights into First Horizon's financial health and market position.
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