Analyst Mike Mayo from Wells Fargo maintained a Buy rating on Truist Financial (TFC – Research Report) and keeping the price target at $45.00.
Mike Mayo has given his Buy rating due to a combination of factors including Truist Financial’s expected benefits from the sale of its insurance segment and subsequent securities repositioning. Mayo highlighted the first quarter’s earnings per share (EPS) beat, largely supported by investment banking, despite a miss on net interest income (NII). He anticipates a positive inflection in NII in the second quarter, following the estimated June 1 sale of the insurance division. This sale is expected to facilitate a significant repositioning of $50 billion in securities to higher yields, which is projected to enhance NII by approximately $1.0-1.5 billion. Mayo’s outlook reflects a strategic move that could yield a substantial pickup in interest income for Truist Financial.
Furthermore, Mayo’s increased earnings estimates for the upcoming years take into account not only the anticipated improvement in securities yields in the second half of 2024 but also the robust fee growth driven by capital markets in the first quarter. Despite Truist lowering its full-year revenue guidance, the firm exhibited strong fee growth, particularly in investment banking and wealth management, which helped offset weaker NII. Mayo also noted the company’s effective cost control and improved tax guidance, which contribute to a positive outlook for the bank’s financial performance. Based on these analyses, Mayo’s Buy rating encapsulates the potential for revenue growth and profitability in light of strategic financial maneuvers and solid fee-based income.
In another report released today, KBW also assigned a Buy rating to the stock with a $45.00 price target.
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Truist Financial (TFC) Company Description:
Truist Financial Corporation was formed in December 2019 following the merger of BB&T and SunTrust banks. It is the sixth largest commercial bank in the United States. The firm has three operating business segments: Consumer Banking and Wealth (CB&W), Corporate and Commercial Banking (C&CB) and Insurance Holdings (IH). The CB&W unit offers retail community banking, wealth, mortgage banking and dealer retail services. Under the C&CB division, it provides services such as corporate, investment and commercial community banking. The IH segment offers property and casualty insurance, life insurance surety coverage, employee benefits, title insurance, commercial and retail insurance premium finance.
