UPDATE: Deutsche Bank Upgrades SunTrust Banks on EPS Upside Potential
In a report published Friday, Deutsche Bank analyst Matt O'Connor upgraded the rating on SunTrust Banks (NYSE: STI) from Hold to Buy, and raised the price target from $36.00 to $39.00.
In the report, Deutsche Bank noted, “Our upgrade reflects the potential for EPS upside over time from a continued recovery in housing--which should result in better than expected trends in credit and expenses. While mgmt has pointed to expense leverage from lower environmental costs/operating losses, the benefit of declining default staff-related costs has not been quantified. We estimate this opportunity is worth $150m or $0.20 per share and is not reflected in consensus estimates. We are raising our 2015E to $3.46 (vs. FC of $3.24) to account for this. Our upgrade reflects this opportunity, the recent 8% decline in the stock (vs. -5% for peers) and the stock trading at 9x our 2015E (a 15% discount vs. peers).”
SunTrust Banks closed on Thursday at $32.55.
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