Compass Point Cuts Price Target on Citizens Financial Group (CFG) Following 4Q Earnings Report

Compass Point maintained a Buy rating on Citizens Financial Group (NYSE: CFG), and cut the price target to $30.00 (from $33.00), following the company's 4Q earnings report. 4Q15 was a solid quarter for CFG as the bank met consensus estimates, however non-interest expense and provision guidance for 2016 were higher than anticipated pressuring shares following the earnings announcement. CFG reported EPS of $0.42/sh, in-line with consensus estimates.

Analyst Jesus Bueno commented, "We reiterate our Buy rating and adjust our price target to $30 from $33 following the 4Q15 earnings release. The reduction in our price target comes as we adjust the credit given towards CFG's asset sensitivity in our valuation methodology. 4Q15 was a solid quarter for CFG as the bank met consensus estimates, however non-interest expense and provision guidance for 2016 were higher than anticipated pressuring shares following the earnings announcement. CFG remains one of our favorite regional banks given its (1) high levels of excess capital, (2) improving loan growth supported by the deployment of excess capital through loan acquisitions, (3) continued focus on efficiency improvements through both cost cuts and non-interest income initiatives, (4) relatively low oil exposure (~1.5% of loans) and (5) attractive valuation with shares trading at 80% of 4Q15 TBV. We expect CFG’s above average loan growth, improving balance sheet mix, cost controls, and share repurchases will support double digit EPS growth in 2016 and 2017 without the need for higher rates. Following CFG's updated expense guidance, we lower our 2016FYE EPS to $1.82 from $1.89 and our 2017FYE EPS to $2.14 from $2.21. We do not assume higher rates in our model."

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

Shares of Citizens Financial Group closed at $19.79 yesterday.

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