Barron’s Gets Bold with Buy Recommendation on SunTrust (STI)

Many investors are concerned about SunTrust Banks (NYSE: STI) earnings and profitability as the bank was forced to repurchase a large sum of defaulted mortgages previously sold to Fannie Mae. Shares have dipped more than 40 percent from a 52-week high over $33 earlier this year.

A Barron’s article over the weekend contends investors are not seeing the big picture are not accounting for recent improvements in the company's credit quality. Barron's likes SunTrust's strong presence across the lower mid-Atlantic region and the Southeast.

With shares of SunTrust trading under 10x next year’s earnings -- well below its tangible book value of about $23 -- and near its 52-week low, Barron’s believes it is a great time to assume or add to a position in the company.

Although SunTrust is not as strong as some of its peers based on its balance sheet, many analysts believe the bank will prove to be a strategic long-term investment. Analyst’s average price target on shares of SunTrust is $24, which calls for about 35 percent upside.

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