On Monday, Synovus (NYSE:SNV) Financial Corp (NYSE:SNV) received an upgrade in its stock rating by Barclays from Equal Weight to Overweight. Accompanying this upgrade, the firm also increased the price target for Synovus from $39.00 to $46.00. The decision comes after the bank's strategic efforts to solidify its financial standing, which began in earnest in June 2023.
The bank's focus since last June has been on limiting growth and Commercial Real Estate (CRE) exposure while expanding its capital base. Barclays noted that Synovus has made significant progress in its strategic shift, including the sale of a portfolio of medical office loans, a reduction in CRE loan originations, optimizing risk-weighted assets (RWA), and restructuring its securities portfolio. These steps have led to a stronger capital position and an improved earnings outlook for the company.
Barclays has cited these strategic moves and the expected positive impact on net interest income from the reinvestment in securities as the basis for the upgrade. The firm believes that Synovus is now poised for a more robust earning trajectory. Consequently, Barclays has also raised its earnings per share (EPS) estimates for the fiscal years 2024, 2025, and 2026 to $4.04, $4.89, and $5.76, respectively, up from the previous estimates of $3.75, $4.50, and $5.56.
In other recent news, Synovus Financial Corp. has announced quarterly dividends for its common and preferred stock. Shareholders of common stock will receive a dividend of $0.38 per share, while holders of the Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series D, will receive $0.57159 per share. The Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series E, will have a dividend of $0.3671875 per share.
Furthermore, Synovus's RWA Project is expected to reduce risk-weighted assets by $2 billion to $2.4 billion, allowing the company to utilize approximately $200 million to $240 million of its common equity tier 1 capital. DA Davidson has raised the price target for Synovus Financial from $43.00 to $47.00, maintaining a Buy rating on the stock.
However, Keefe, Bruyette & Woods, Truist Securities, and Piper Sandler have all adjusted their price targets for Synovus Financial due to various factors, including net interest income headwinds, a first-quarter earnings miss, and near-term revenue pressures. Despite these adjustments, all three firms continue to have a positive outlook on the company's stock.
InvestingPro Insights
As Synovus Financial Corp (NYSE:SNV) garners a favorable upgrade from Barclays, the real-time metrics from InvestingPro paint an illuminating picture of the company's financial landscape. Synovus, with a market capitalization of $5.47 billion and a Price/Earnings (P/E) ratio standing at 12.75, reflects a valuation that investors may find appealing when compared to industry peers. Notably, the company's adjusted P/E ratio has shown a slight decrease to 12.38 over the last twelve months as of Q1 2024, suggesting a stable earnings outlook.
InvestingPro Tips indicate that analysts have revised their earnings upwards for the upcoming period, which aligns with the optimism expressed by Barclays. Moreover, Synovus has demonstrated a commitment to shareholder returns, maintaining dividend payments for 51 consecutive years, and currently offers a dividend yield of 4.07%. While the company has experienced a revenue decline of 12.67% over the last twelve months as of Q1 2024, its solid operating income margin of 39.12% and analyst predictions of profitability this year suggest a resilient operational performance.
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