Goldman Sachs Upgrades Regions Financial (RF) to Conviction Buy

March 19, 2020 7:42 AM EDT
Get Alerts RF Hot Sheet
Price: $21.76 --0%

Rating Summary:
    13 Buy, 20 Hold, 2 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 7 | Down: 11 | New: 29
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Goldman Sachs analyst Ryan Nash upgraded Regions Financial (NYSE: RF) from Buy to Conviction Buy with a price target of $14.00.

The analyst comments "With short-term rates at zero and a 10-year in the 100bp range, we believe RF margins will prove to be much more defensive than others given its hedging of short-term interest rate risk, while its hedged a sizable portion of its fixed rate exposure. Given this dynamic, we see its net interest margin falling 8bps by 4Q21 and stabilizing at around 3.25%. This compares to peer margins falling 36bps. In addition, while credit remains uncertain at this point, given the limited balance sheet growth the past several years (loans have grown 1.4% CAGR the past 5 years vs. peers at 3-4%) and we see credit losses rising in our modest recession scenario ~30bps (to ~80bps) which is in-line with the peer group. When we factor in other potential offsets, we see 14% stressed EPS risk, which is just over half the regional bank average of 26%. With shares trading at just over 0.7x P/TBV and 5.1x our stressed EPS (peers at 7.4x) we think risk reward is amongst the best in our coverage."

For an analyst ratings summary and ratings history on Regions Financial click here. For more ratings news on Regions Financial click here.

Shares of Regions Financial closed at $7.49 yesterday.

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