Why This Truist Financial Analyst Is Turning Bullish

Shares of Truist Financial Corp (NYSE: TFC) recovered slightly in early trading on Thursday, following its sharp decline during the previous session.

The modest liability sensitivity of the company’s balance sheet positions it well for interest rate cuts by the Federal Reserve in 2024, according to BofA Securities.

The Truist Financial Analyst: Ebrahim Poonawala upgraded the rating for Truist Financial from Neutral to Buy, while raising the price target from $37 to $43.

The Truist Financial Thesis: A Fed rate cut of 100 basis points will boost the company’s net interest income (NII) by 30 basis points, versus the peer median of an adverse impact of 120 basis points, Poonawala said in the upgrade note.

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“We see potential for management to outperform on cost save targets on the back of the recently announced organizational simplification (= enhanced productivity) and as management synergizes its merger-of-equals (MOE) between SunTrust/BB&T,” the analyst wrote.

“While investors are divided on the prospect of management selling its remaining 80% stake in TIH, we believe that the capital (~200bp of CET1 capital unlocked) and EPS optionality (potential to restructure part of the bond book) offset the loss of a differentiated (but not a strategically integral to management’s go-to-market strategy) revenue stream,” he added.

TFC Price Action: Shares of Truist Financial had risen by 1.78% to $37.16 at the time of publication on Thursday.

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