Market Overview

Fed Rate Cuts Will Pressure Regions Financial, BofA Says In Move To Sidelines

Share:
Fed Rate Cuts Will Pressure Regions Financial, BofA Says In Move To Sidelines

The Fed is expected to announce three rate cuts through 2020, which could result in decelerating EPS growth at Regions Financial Corp (NYSE: RF), according to Bank of America Merrill Lynch.

The Analyst

Erika Najarian downgraded Regions Financial from Buy to Neutral and reduced the price target from $18 to $16.

The Thesis

The Fed could announce rate cuts in July 2019, September 2019 and March 2020, exerting pressure on Regions Financial’s net interest income, Najarian said in the downgrade note. (See her track record here.) 

When asked about possible Fed rate cuts at a recent investor meeting, Regions management expressed confidence in the net interest margin remaining within the long-term range of 3.4-3.7%, the analyst said. Regions Financial will be able to sustain NIM at the low end of the range, she said. 

BofA projects 2020 and 2021 NIM of 3.39% and 3.38%, respectively, citing hedge activity and likely aggressive deposit re-pricing.

NII may decline by 2% in 2020 and by 1% in 2021, Najarian said.

“First, we expect loan growth to cool from robust 1Q levels. Second, we expect the planned run-off of loans originated from GreenSky (NASDAQ: GSKY) to inhibit total loan growth.”

BofA reduced EPS estimates for 2019, 2020 and 2021 from $1.58 to $1.57; from $1.70 to $1.62; and from $1.80 to $1.66, respectively.

Price Action 

Regions Financial shares were up 0.92% at $15.20 near the end of Thursday's trading session. 

Related Links:

Benzinga's Top Upgrades, Downgrades For July 11, 2019

Barron's Picks And Pans: Coca-Cola, Kroger, Shopify And More

Photo by qwesy qwesy/Wikimedia

Latest Ratings for RF

DateFirmActionFromTo
Jul 2019DowngradesBuyNeutral
Apr 2019MaintainsEqual-WeightEqual-Weight
Apr 2019MaintainsStrong BuyStrong Buy

View More Analyst Ratings for RF
View the Latest Analyst Ratings

Posted-In: Bank of America Merrill Lynch Erika NajarianAnalyst Color Downgrades Price Target Analyst Ratings

 

Related Articles (RF + GSKY)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
SKXMaintains44.0
HYMaintains66.0
MSFTMaintains160.0
SKXUpgrades
WLTWMaintains208.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com

Twitter Temporarily Goes Down, Becomes A Trending Hashtag Anyway

Texas Border Bill Aims To Stop Produce Imports From Wilting At International Ports-Of-Entry