Pinnacle Financial Partners PNFP shares could see a turning point, as 2018 will be a year of execution with a focus on fully integrating BNC Bancorp BNCN, according to Stephens.
The Analyst
Stephens analyst Tyler Stafford upgraded Pinnacle Financial from Equal-Weight to Overweight and increased the price target from $72 to $74.
The Thesis
The market has largely ignored the EPS accretion associated with the BNC Bancorp buy, tax reform benefits and accelerating fundamentals from the legacy franchise, Stafford said in a Monday note. Pinnacle Financial shares trade almost at the same price they did prior to the M&A announcement, the analyst said.
The company's shares have seen the greatest multiple compression of any mid-cap bank, declining 5.1 times its next-twelve month multiple, Stafford said. The stock trades at the lowest relative multiple to the bank index in recent history, he said.
Citing recent investor meetings with Pinnacle management, Stafford said investor interest was strong and sentiment is beginning to shift more favorably on the stock.
Stephens tweaked its 2018 and 2019 earnings per share estimates and consequently nudged up its price target.
"With the integration nearly complete, continued double-digit growth expectations, and [greater than] 1.50-percent ROA, we believe the current 12.8x multiple can re-rate higher and are upgrading PNFP."
The Price Action
Pinnacle Financial shares are down about 4 percent over the past year.
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