Regions Financial stock target raised on EPS forecast revision By Investing.com

On Monday, Truist Securities updated its outlook on shares of Regions Financial (NYSE: RF), increasing the price target to $23 from the previous $21, while maintaining a Hold rating on the stock. The adjustment reflects a revision in the core earnings per share (EPS) forecast for 2024 and 2025, now set at $1.96 and $2.05 respectively, up from the earlier estimates of $1.87 and $2.12.

The revised forecast by Truist Securities is influenced by an anticipated rise in net interest income (NII) and a reduction in provisioning for 2024, balanced against expected higher expenses in 2025. Despite a softer loan growth outlook, the NII trajectory is projected to remain stable.

The cumulative interest-bearing deposit beta is also predicted to decrease slightly to 44% by the fourth quarter of 2024, aligning with management’s expectations.

Truist Securities suggests that net interest income should see a sequential increase in the second half of 2024 and continue to rise after the first quarter of 2025. This growth is anticipated to be fueled by the repricing of fixed assets and a reduction in the negative carry on swaps. These forecasts are made under the assumption of Federal Reserve rate cuts beginning after the first quarter of 2025.

The firm’s analysts have adopted a more conservative stance on the cumulative interest-bearing deposit beta on the downside, assuming a 31% rate compared to management’s mid-30s expectation. This conservative approach is reflected in the updated price target.

Regions Financial’s stock is currently considered to be trading at a value that is close to fair when compared to the KRE index on a price-to-earnings basis. The new price target of $23 is based on an 11 times multiple of the estimated 2025 earnings per share.

In other recent news, Regions Financial Corporation (NYSE:) has been the focus of positive assessments from DA Davidson, Baird, and RBC Capital, each of whom have raised their price targets for the company.

This comes on the heels of Regions Financial’s robust Q2 financial results, which saw earnings of $477 million and earnings per share of $0.52. The bank also maintained a steady total revenue of $1.7 billion on a reported basis and $1.8 billion on an adjusted basis.

DA Davidson raised the price target to $26.00, noting the company’s improved credit trends and anticipated stability in expenses. Baird also raised the price target to $21.00, attributing this to the company’s stable net interest income and consistent return generation. RBC Capital increased the price target to $23, highlighting the bank’s proactive approach to interest rate risk management and strong capital position.

In addition to these developments, Regions Financial has strategically utilized excess capital for repositioning its securities portfolio, share repurchases, and potential bolt-on mergers and acquisitions.

The bank maintains a strong capital level with a Common Equity Tier 1 ratio of approximately 10.4%. These recent developments underscore Regions Financial’s ongoing efforts to maintain its financial health and generate consistent returns over time.

InvestingPro Insights

Regions Financial’s (NYSE: RF) recent performance and analyst revisions suggest a nuanced outlook for investors. An InvestingPro Tip indicates that analysts have revised their earnings upwards for the upcoming period, aligning with Truist Securities’ positive revision of Regions Financial’s core EPS forecast for 2024 and 2025. Additionally, the company has a strong track record of maintaining dividend payments, having done so for 21 consecutive years, which could be appealing to income-focused investors.

InvestingPro Data reveals a market capitalization of $20.12B and a P/E ratio of 12.42, which suggests that the stock is trading at a reasonable valuation relative to its earnings. Moreover, the dividend yield stands at an attractive 4.53%, complementing the stock’s value proposition. Regions Financial’s stock is also trading near its 52-week high, reflecting the recent positive momentum highlighted by a strong return over the last month.

For investors seeking a deeper analysis, there are additional InvestingPro Tips available for Regions Financial, which can be accessed at https://www.investing.com/pro/RF. For those considering an InvestingPro subscription, use coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.

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