I can’t say that I’m all that surprised that First Horizon’s (FHN)
last two quarters have come in below expectations, leading the shares
to underperform its regional bank peers by around 5% on average
(including underperforming the likes of Bank of America (BAC), Wells Fargo (WFC), SunTrust (STI), Regions (RF), and Pinnacle (PNFP)
). I’d written back in July that I thought the long-term potential I
saw was tempered by a tougher near-term outlook, and that has come to
pass as loans, spread, and fee income have come in lower than expected.
I’d
call my opinion on First Horizon today “positive, with an asterisk”. I
believe First Horizon is a well-run bank on a basic level, and I think
the strategy that has driven significant in-market growth in Tennessee
over the last five years can be successfully applied elsewhere (namely
the Carolinas and Florida). I also believe there are opportunities to
grow its multi-faceted national specialty lending platforms. The “but”
is that management has already laid out fairly ambitious expectations,
and First Horizon is trying to grow in some of the most intensely
competitive markets in the country. I do believe these shares are
undervalued now, but more and more “show me” burden is falling on
management’s shoulders.
Read more here:
First Horizon Underperforming On Lackluster Numbers
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