Truist Financial Corp’s stock, symbolized as TFC on the NYSE, rebounded marginally this Thursday, recuperating from a significant downturn the previous session.
BofA Securities believes the company’s balanced liabilities will position it advantageously in the face of anticipated interest rate cuts by the Federal Reserve in 2024.
Analyst Ebrahim Poonawala has upgraded Truist Financial’s rating from Neutral to Buy, simultaneously raising the price target from $37 to $43.
Analyst’s Thesis: Poonawala notes that with a 100 basis point cut by the Fed, Truist Financial’s net interest income (NII) will increase by 30 basis points, a stark contrast to the peer median’s projected 120 basis point decline, as stated in the upgrade note.
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The analyst articulated, “We see potential for management to outperform on cost save targets on the back of the recently announced organizational simplification (= enhanced productivity) and as management synergizes its merger-of-equals (MOE) between SunTrust/BB&T.”
Poonawala further added, “While investors are divided on the prospect of management selling its remaining 80% stake in TIH, we believe that the capital (~200bp of CET1 capital unlocked) and EPS optionality (potential to restructure part of the bond book) offset the loss of a differentiated (but not a strategically integral to management’s go-to-market strategy) revenue stream,” he added.
TFC Price Action: As of publication on Thursday, Truist Financial’s shares have surged by 1.78% to $37.16.
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