Investment Analysts’ Recent Ratings Updates for SunTrust (STI)
SunTrust (NYSE: STI) was the recipient of a ratings changes during the seven days:
- SunTrust had its “outperform” rating reaffirmed by analysts at Sanford C. Bernstein. They now have a $31.00 price target on the stock.
- SunTrust was upgraded by analysts at JPMorgan Chase from a “neutral” rating to an “overweight” rating. They now have a $31.50 price target on the stock, up previously from $29.00. They wrote, “As the housing market gradually recovers, SunTrust should benefit from the decline in residential mortgage related net charge-offs (NCOs), and other credit related expenses (such as collections costs), and to some extent, OREO expense and mortgage putback expense. … Benefits from the housing market recovery plus continued cost cutting beyond the restructuring program announced should benefit SunTrust’s earnings outlook. Valuation is attractive at 1.0x tangible book, which is below peers. 2013 does not represent normalized earnings and the large drag from housing related costs should be a greater benefit to earnings than peers beyond 2013.”
- SunTrust had its price target raised by analysts at Oppenheimer from $28.00 to $31.00. They now have an “outperform” rating on the stock. They wrote, “SunTrust announced a series of actions to reduce the volatility of its capital position (post-Basel III) and improve the overall risk profile while hopefully putting the remaining mortgage repurchase costs related to pre-’09 GSE loan sales behind it. The financial benefits of these events improve the earnings visibility at SunTrust and give us greater confidence in a dividend increase and buyback authorization in March ’13 following the next CCAR. While shares of SunTrust are up ~50% YTD, we continue to believe the stock is undervalued at 1.0x pro forma tangible book value. We are increasing our price target to $31 (from $28).”
- SunTrust was upgraded by analysts at BMO Capital Markets from a “market perform” rating to an “outperform” rating. They now have a $35.00 price target on the stock, up previously from $26.00.
- SunTrust had its “buy” rating reaffirmed by analysts at Jefferies Group.
- SunTrust had its “buy” rating reaffirmed by analysts at Compass Point.
- SunTrust had its price target raised by analysts at Morgan Stanley from $29.00 to $33.00. They now have an “overweight” rating on the stock. They wrote, “The $3b in loans that are moving to held for sale are primarily NPL and Delinquent. That is a significant 65% of NPL and Delinquents, suggesting the market for Resi in judicial states is far stronger than investors had been anticipating. Most other banks are suggesting that investors are not interested in judicial state NPLs as they sit in the courts for years. STI suggests its inventory may be better. Until proven otherwise at next week’s industry conference, we expect the market will take STI’s asset sale as a positive read across for banks in general, and particularly for Citi which has a skew to judicial states through its presence in NY, NJ, FLA.”
- SunTrust had its “buy” rating reaffirmed by analysts at UBS AG.
- SunTrust had its price target raised by analysts at Goldman Sachs from $25.00 to $29.00. They now have a “neutral” rating on the stock. They wrote, “After STI’s announcement, we update our 2012/2013/2014 estimates to $3.59/$2.85 from $2.03/$2.50/$2.95. The changes to our estimates reflect the following key assumptions: (1) we assume NII decreases approximately $100mn from our prior 2013 forecast due to a net $40mn annual impact from the sale of KO shares and the foregone interest income on the $3bn of loans the company plans to sell prior to year-end, (2) following the $375mn provision in 3Q, we assume mortgage repurchase provision of $40mn in 2013 vs. our prior estimate of $320mn, and (3) we assume approximately one-third of the $3bn loans sold are currently non-performing and as such reduce our estimates for credit-related expenses in 2013 by $80mn to $288mn. Given these changes to our estimates, we raise our 12-month price target to $29 from $25 which reflects 10X our 2013 EPS of $2.85.”
- SunTrust had its “underweight” rating reaffirmed by analysts at Barclays Capital.
- SunTrust had its price target raised by analysts at Bank of America from $20.00 to $24.00. They now have an “underperform” rating on the stock. They wrote, “STI announced a series of moves that the market will view positively, but we would fade what is likely to be a strong move in the stock today. Positively, pulling forward its putback expense improves EPS visibility. This said, bulls on this stock have valued STI on “core” EPS – stripping out mortgage putback expense and the lion’s share of credit-related expenses. STI’s announcement does not materially change its medium-term core EPS power, which we believe is lower than the market expects. The biggest differential, we believe, between us and consensus is on spread revenue and, to a lesser extent, core expense control. We are raising our PO to $24 to reflect a higher target multiples to remove the overhang from mortgage putback, but this still reflects downside risk. As such, we remain cautious on the stock. On 3Q12 GAAP EPS reflects: 1) a +$2.47 from the sale of KO stock; 2) a $375mn mortgage repurchase provision in 3Q (-$0.49), sufficient to cover est. losses from ’05-08 vintages acc. to STI, 3) transfer of ~$3bn loans to HFS, generating a $250mn charge (-$0.33); and 4) the sale of $200mn in affordable housing investments, resulting in a pre-tax loss of $100mn (-$0.13).”
Shares of SunTrust traded up 1.85% during mid-day trading on Wednesday, hitting $28.09. SunTrust has a 52 week low of $15.79 and a 52 week high of $28.14. The company has a market cap of $14.999 billion and a P/E ratio of 18.52.
SunTrust Banks, Inc. (SunTrust) is a commercial banking organization. The Company is a diversified financial services holding company whose businesses provide a range of financial services to consumer and corporate clients.