It’s gratifying to see Synovus (SNV) working as a stock. I’ve been bullish on this one for a while now, and it has taken a while for the stock to work (and the 5-year return is still below average), but the shares are up more than 60% from the time of my last update, making it one of the best performers of the “normal” banks I follow (banks like SVB Financial (SIVB) are a different story).
Synovus has done a lot to quiet the critics where credit quality is concerned, and that drives some meaningful upward revisions for my model. Now the question is whether the company can strike that always-tricky balance of growing revenue and achieving better profitability – while banking is a business that rewards scale (so, revenue growth will help), being too miserly with costs risks compromising long-term growth at the cost of better near-term margins.
I think Synovus has near-term upside to the mid-$40s, and I see the stock priced to generate an annualized long-term total return in the high single-digits – still good, but not as exceptional as before.
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