Regions Financial Trades Higher After Goldman Upgrade
In the research report, Goldman Sachs wrote, "We upgrade RF to Buy from Neutral and see 29% upside. A further recovery in real estate will drive both provisions and environmental costs lower. Although low rates hurt, RF has offsets as funding benefits and liquidity deployment mitigate asset yield pressure and drive its NIM up 10 bp by YE 2013E."
Goldman Sachs added that, while loans are still shrinking, expectations are low--a leveling off of CRE combined with growth in C&I, auto, and cards should drive growth beyond expectations.
Following the news, Regions Financial opened at $6.19 on Thursday. The company's 52-week high is $6.98 with a market cap of $8.743 billion.
In addition, Goldman Sachs is not the only firm to have upgraded Regions Financial, with Macquarie changing its rating from Neutral to Outperform. However, Morgan Stanley downgraded the company from Buy to Hold, as did Deutsche Bank.
Still, the Goldman Sachs upgrade is sure to please holders of Regions Financial, following an eventful week. On Tuesday, the company announced that it had recruited three specialty bankers for the Restaurant, Healthcare and Technology & Defense banking groups.
"These industries are important growth engines for the U.S. economy, and companies in these sectors require financial products, services and expertise tailored to their specific needs in order to be successful," said John Barton, specialized industries executive at Regions Bank. "Robert, Greg and Chris bring a wealth of market knowledge and expertise that will benefit our clients and allow Regions to support more growing companies in the communities we serve."
On Wednesday, Birmingham, Alabama-based Regions Financial announced that it will sponsor a citywide summer academic competition to promote financial literacy and college readiness. Apparently, the company is looking to prepare its next set of leaders early.
Regions Financial last reported earnings on April 24, with quarterly earnings of $0.11 per share, beating the consensus estimate of $0.08 by $0.03. Analysts currently expect EPS of $0.16 next quarter.
On Thursday, Regions Financial is trading near $6.30, up about 1.4% on the session.
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