It's no secret that bank stocks have sold off
significantly over the past six months, even with a nice bounce after
Christmas, as investors have increasingly priced in a recessionary
environment and abandoned the sector for greener pastures. In the case
of Synovus (SNV),
not only has the market priced in a harsher near-term environment
(which may or may not be reasonable given its exposure to higher
investment property exposure in the Southeast US), but it has also
levied a penalty for the company's decision to acquire Florida's FCB.
I had warned
that Synovus shares would probably linger under a cloud for a while
after the deal, but I didn't think that would mean a roughly 15%
underperformance to regional bank benchmarks in just six months. Synovus
isn't going to be a torrid organic grower, it faces plenty of incoming
competition in the Southeast, and management still has work to do with
its funding mix, but I think the discount today is too wide. I can't say
that this is my favorite bank from an operational perspective, but the
embedded expectations seem too low to me today.
Read more here:
Synovus Now Firmly In The 'Show Me' Camp
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