In a report published Monday, Keefe, Bruyette & Woods analyst Christopher Mutascio upgraded the rating on SunTrust Banks (NYSE: STI) from Market Perform to Outperform, and raised the price target from $41.00 to $46.00.
In the report, Keefe, Bruyette & Woods noted, “We are upgrading STI to Outperform and raising our target price to $46, representing a P/E multiple of 12.2x on our newly established 2016 EPS estimate of $3.75.
"The reasons for the upgrade include 1) most potential upside to our revised target prices, 2) concerns about reduced swap income have weighed on the shares but seem manageable, 3) generating the best loan growth within our large cap bank coverage, 4) the potential inflection in loan loss provision expense represents a materially lower drag on earnings than most banks and denotes high earnings quality, and 5) continued cost save initiatives represent another potential lever - not the only lever. Establishing 2016E.”
SunTrust Banks closed on Friday at $39.64.
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