Compass Point maintained a Buy rating on Regions Financial (NYSE: RF), and cut the price target to $12.00 (from $12.50), following the company's 4Q earnings report. The reduction to the price target comes after an increase to the stressed loss assumptions for RF's energy portfolio. The increase has been incorporated into Compass Point's valuation methodology, as they quantify the overhang on the stock stemming from concerns over the energy portfolio.

Analyst Jesus Bueno commented, "We reiterate our Buy rating and lower our price target to $12 following the 4Q15 earnings release. The reduction to our price target comes as we increase the stressed loss assumptions for RF's energy portfolio which we incorporate into our valuation methodology as we quantify the overhang on the stock stemming from concerns over the energy portfolio. Regions remains one of the cheapest regional banks, trading at 96% of 4Q15 TBV compared with the peer average of 130%. The bank also trades at just 9.4x FY16E EPS compared with peers at 11.4x. It appears that investors are now pricing in 15-20% in incremental energy losses for 2016. We view the recent sell-off in RF shares as overdone as even in our adversely stressed scenario incremental credit losses amount to less than $0.40/sh. Additionally, RF is one of the few regional banks which we believe can grow EPS by double digits without the need for higher rates. We expect the stock to re-rate closer to peers on a P/E basis in 2016 as RF shows its ability to generate positive operating leverage through expense management and fee income growth. We also believe the market currently gives RF little value for its excess capital and above average asset sensitivity. We are maintaining our 2016 & 2017 EPS estimates of $0.87/sh and $0.97/sh as the benefit from the December rate increase is offset by higher provision expenses."

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 $8.20 yesterday.