03. First Horizon Corporation (NYSE:FHN)
Price Reaction after the Upgrade: +0.88 (+6.18%)
On January 24, UBS analyst Brody Preston executed a significant upgrade within the banking sector, focusing on First Horizon Corporation (NYSE:FHN). The upgrade involved a shift from a Neutral to a Buy rating, accompanied by an adjusted price target of $16.00, up from the previous $15.50. UBS’s rationale for upgrading First Horizon Corporation (NYSE:FHN) revolves around the bank’s robust capital position, its near tangible book value (TBV) stock valuation, and management’s articulated objectives of deploying excess capital above the 11% Common Equity Tier 1 (CET1) threshold. This strategic move by UBS reflects a detailed analysis of First Horizon Corporation (NYSE:FHN) financial standing, growth potential, and alignment with management’s capital deployment strategies. The upgrade comes at a time when the banking industry is navigating various challenges, including economic uncertainties and regulatory landscapes. UBS’s optimistic outlook on First Horizon Corporation (NYSE:FHN) suggests confidence in the bank’s ability to not only maintain a strong capital position but also effectively return capital to shareholders. The adjusted price target signifies UBS’s belief in the bank’s resilience and potential for future growth. By emphasizing the near-TBV stock valuation, the analysis acknowledges the attractiveness of First Horizon Corporation (NYSE:FHN) stock in the current market conditions.
ClearBridge Small Cap Value Strategy made the following comment about First Horizon Corporation (NYSE:FHN) in its Q2 2023 investor letter:
“The financials sector was also a positive contributor to relative outperformance during the quarter as fears of further contagion of March’s bank crisis eased and allowed for a rebound in many of the higher-quality small and regional banks caught up in the panic. For example, as investor pessimism dissipated, Bank OZK exceeded analyst expectations and raised its quarterly dividend, highlighting continued improvement in its net interest income margin in the first quarter. We capitalized on the retreat in bank stocks early in the quarter to initiate a new position in regional bank First Horizon Corporation (NYSE:FHN), which reflected a unique opportunity to buy a bank with an extremely strong capital and liquidity profile at a distressed value after its deal to be acquired by Toronto Dominion was canceled through no fault of First Horizon. While we continue to be vigilant for signs of further deterioration in the sector, we have high conviction in our holdings and believe that they will continue to be positive contributors to our long-term performance.”
