FBR Capital reiterates a 'Market Perform' on Regions Financial (RF); 1Q Results Better than Expected, but a Lot of Work Still to Be Done

FBR Capital reiterates a 'Market Perform' on Regions Financial (NYSE: RF), PT $7.50.

FBR analyst says, "We are increasing our FY11 and FY12 EPS from $(0.25)
and $0.35 to $0.04 and $0.42, respectively, reflecting 1Q's earnings surprise, which was driven by lower provisioning, securities gains, and a tax benefit. We note that core earnings, by our calculation, were $(0.05), demonstrating the profitability challenge facing Regions. With the stock trading at 1.3x projected FYE11 TBV and weak expected earnings power in the near term, we view RF shares as fairly valued. There are several overhangs for the stock in our opinion: credit costs are expected to remain elevated longer than peers due to Southeast CRE exposure and unlikely repayment of TARP in the near term. We believe that until CRE values improve and materially increase RF's core earnings power, the stock will be range bound."

For more ratings news on Regions Financial click here and for the rating history of Regions Financial click here.

Shares of Regions Financial closed at $7.17 yesterday.

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