Citi upgrades Truist, says investors are wrong to make ‘apples and oranges’ comparison with SVB
Truist Monetary shares can bounce 60% after their current drop, based on Citi. Analyst Keith Horowitz upgraded the financial institution inventory to purchase from impartial, saying traders are flawed concerning the deposit outlook at Truist. “The TFC bear case is all about excessive HTM [held-to-maturity] losses relative to fairness and we imagine this thesis is flawed. Our view is that the deposit outlook is okay, which means that securities may be held to maturity at par with out realizing losses (simply decrease internet curiosity margin over time from alternative value),” Horowitz wrote to shoppers on Wednesday. “Given the current worth motion we view this as a lovely entry level and are upgrading TFC to Purchase,” he mentioned. Truist shares are down 25% in 2023, and tumbled greater than 17% and 16% this and final week, respectively, as traders feared the danger of contagion following the failure of Silicon Valley Financial institution. The analyst’s $52 worth goal implies shares can bounce 63% from Tuesday’s closing worth of $31.88. The inventory is down 2% within the Wednesday premarket. The analyst mentioned that Truist won’t be compelled to promote securities to remain afloat. “Given the very totally different deposit mixture of TFC and a brand new BTFP program, it appears extremely unlikely TFC will probably be a compelled vendor of securities, so unclear why the market is so overly centered on this situation apart from presumably a search to seek out the subsequent SVB, however TFC is a basically totally different financial institution, so that is an apples and oranges comparability,” Horowitz mentioned. TFC 5D mountain Truist shares 5-day —CNBC’s Michael Bloom contributed to this report.