On Monday, Evercore ISI updated its outlook on shares of Truist Financial (NYSE:TFC), raising the price target to $48.00 from the previous $44.00, while maintaining an In Line rating for the stock.
The adjustment follows Truist's second quarter results, which prompted Evercore ISI to increase its 2024 earnings per share (EPS) estimate to $3.44, up from $3.39. This revision reflects a $0.13 per share beat in the second quarter, slightly dampened by a higher expense run rate.
Conversely, the firm reduced its 2025 EPS estimate for Truist to $3.91 from $4.00, citing higher expenses that overshadow an improved net interest income (NII) projection.
The updated 2025 forecast now accounts for 200 basis points of operating leverage, a conservative adjustment from the previously expected 240 basis points. This change is attributed to increased caution regarding Truist's business and infrastructure investments.
Evercore ISI also introduced its 2026 EPS estimate for Truist at $4.58. The firm's revised price target of $48 reflects higher sector valuations and incorporates a steady $500 million in share buybacks per quarter through 2026. Evercore ISI expressed incremental confidence in Truist's net interest income outlook, as growth trends show positive movement and management maintains a conservative stance.
The report acknowledged a potential upside to the 2024 EPS should the Federal Reserve decide to cut rates earlier than the November 2024 timeline anticipated by Truist's management, due to the bank's modest liability sensitivity.
Still, the firm also noted a moderate risk to the expected degree of positive operating leverage in 2025 and beyond, as Truist expands in investment banking and invests in IT and infrastructure.
In conclusion, Evercore ISI considers Truist Financial's current valuation compared to its peers—trading at 11.3 times its 2025 EPS versus the peer average of approximately 10.5 times—to be fair, and thus reiterates its In Line rating.
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