Market-beating regional bank shows ‘boring works,’ says Bank of America
Several catalysts are set to drive shares of PNC Financial higher, according to Bank of America. The Pittsburgh-based regional bank was reiterated as a buy and its price target raised to $211 from $204, implying more than 9% upside from Tuesday’s close, the Wall Street investment bank said. PNC has already seen massive gains, surging more than 61% in the past 12 months. That is almost double the rally of the S & P 500 during the same time. PNC .SPX 1Y mountain PNC vs. S & P 500, 1-year While analysts led by Ebrahim Poonawala anticipate that loan demand will remain sluggish through the rest of the year, Bank of America sees year-over-year loan growth of 1.2% in 2025. Moreover, net interest income next year is estimated to expand 8.5%, to what PNC management says will be a record. “Mgmt. noted that clients had hit the pause button due to the current interest rate environment and upcoming U.S. elections,” Poonawala wrote in a Tuesday note to clients entitled “Boring works!” Stepped up “new loan commitments provide some optimism around the potential for a pickup in loan growth heading into 2025,” the 11-page report said. Poonawala cited exceptional “defensibility” in net interest income as a catalyst for growth, noting a repricing of low-yielding bonds, swap maturities and floating rate debt. Along with that, he pointed to an organic growth runway in new markets in Texas and the southwest and contributions from merger and acquisition activity as potential drivers. “We believe all three factors that drove our positive thesis remain firmly in place,” the analyst said. A majority of Wall Street shares a bullish view on PNC. Of the 24 analysts covering the stock, 15 have a strong buy or buy rating, while seven are neutral. The Street’s average price target of $195, however, would translate into little upside from Tuesday’s close. On Tuesday, PNC rose about 2% due to the regional bank’s quarterly results topping Wall Street estimates .
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