Deutsche Bank Upgrades SunTrust Banks (STI) to Buy

September 6, 2013 6:49 AM EDT
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Price: $56.48 +2.43%

Rating Summary:
    17 Buy, 22 Hold, 4 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 19 | Down: 19 | New: 13
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Deutsche Bank upgraded SunTrust Banks (NYSE: STI) from Hold to Buy with a price target of $39 (from $36).

"Our upgrade reflects the potential for EPS upside over time from a continued recovery in housing--which should result in better than expected trends in credit and expenses," analyst Matt O'Connor said. "While mgmt has pointed to expense leverage from lower environmental costs/operating losses, the benefit of declining default staff- related costs has not been quantified. We estimate this opportunity is worth $150m or $0.20 per share and is not reflected in consensus estimates. We are raising our 2015E to $3.46 (vs. FC of $3.24) to account for this."

He added, "Our upgrade reflects this opportunity, the recent 8% decline in the stock (vs. -5% for peers) and the stock trading at 9x our 2015E (a 15% discount vs. peers)."

For an analyst ratings summary and ratings history on SunTrust Banks click here. For more ratings news on SunTrust Banks click here.

Shares of SunTrust Banks closed at $32.55 yesterday.

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