Following the news from First Horizon Corp (New York Stock Exchange: FHN) merger with Toronto-Dominion Bank (New York Stock Exchange:TD) (TSE:DT) being canceledJefferies analyst Casey Cabello you believe the stand-alone value of FHN shares is in the range of $11 to $13 per share.
Haire did a comparative analysis of FHN using Synovus Financial (SNV) and Hancock Whitney Corp. (hwc) as the analyst believes that these banks are the best comparable banks due to their similar geographic presence, size and profitability profile. The analyst added that both SNV and HWC are trading at around 7 times the 2023 EPS Consensus Estimate, which equates to a $13 share price for FHN. On a tangible book value basis, SNV and HWC are trading at ~1x their stated tangible book value, which is equivalent to $11 per share for FHN.
Even the highest rated RBC analyst Jon Arfstrom seemed bullish on FHN's business outlook while maintaining a Hold rating on the stock but lowering the price target to $12 from $25. Arfstrom's new price target implies 9.7% upside potential at current levels.
Arfstrom commented: โDespite the termination of the deal, our view of the company has not changed and we believe they can remain a consistent player in attractive markets with consistent credit quality and a focus on positive operating leverageโฆ[and] it can continue to operate profitably in the current environment as a stand-alone entity without material impediments."
Regional banks experienced a rally today in premarket trading led by PacWest Bancorp (NASDAQ:PACW) which announced a dividend cut. Other banks, including Western Alliance Bancorp (WALL), Comerica (CMA) and Zions Bancorp. (ZION) also gained in pre-market trading at the time of writing.
Volatility in regional banks has dragged down the SPDR S&P Regional Banking ETF (CREATE) which more than 30% so far this year.
