Jefferies Upgrades First Horizon National (FHN) to Buy
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Jefferies upgraded First Horizon National (NYSE: FHN) from Hold to Buy with a price target of $22.00 (from $18.00) to reflect post-election stock/EPS dynamics.
Analyst Ken Usdin commented, "We upgrade FHN to Buy (from Hold) as shares trade inline with the smid-cap P/E average but do not fully reflect a top quartile asset-sensitivity profile and upside potential from a better environment for capital markets activity. Though achieving $1.5mm in average daily revenues in trading remains a long shot, we are more positive on the business given higher bond market volatility and the highly accretive Coastal Securities acquisition. Additionally, organic growth prospects remain solid and FHN's underinvestment in CRE gives the bank ample runway to grow in a widening spread environment (should also help the NIM). FHN could be a prime beneficiary of a potential lift in the $50B SIFI regulatory threshold given its willingness to consider large acquisition or merger-ofequals (MOE) opportunities and its ability to leverage its robust IT infrastructure. Our price target of $22 implies 18x our '18 EPS estimate, or 110% of the current '17 S&P 500 P/E multiple. Downside risks to our upgrade: fewer rate hikes, slower loan growth."
Shares of First Horizon National closed at $18.71 yesterday.
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