This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

SunTrust Cleans House (Update 1)

Jefferies analyst Ken Usdin reiterated his "Buy" rating for SunTrust, while raising his price target for the shares by a dollar to $29, viewing the "Coke sale and balance sheet derisking as a modest positive as it eliminates the mortgage repurchase overhang and creates a cleaner earnings run-rate for '13."

Usdin raised his 2013 EPS estimate for SunTrust by a dime, to $2.75.

Regarding the transfer of loans to held-for-sale, the analyst said "we assume that $500mm-$700mm of the $3B in loans are nonperforming, with the remainder being government guaranteed lending."

Usdin also said that SunTrust's announced actions would be "slightly dilutive to tangible book" value and its Basel III Tier 1 common equity ratio, with tangible book value moving "$0.75-$1.00 lower given that gains from the Coke transaction already showed up in accumulated other comprehensive income," and the estimated Basel III Tier 1 ratio declining to 7.9% from 8.0% in June.

BMO Capital Markets analyst Lana Chan upgraded SunTrust to "Outperform," from "Market Perform," while raising her price target for the shares to $35 from $26, saying that "we acknowledge that we missed the 50% move up in the stock YTD; however, STI's valuation remains one of the cheapest among the regional banks."

Chan raised her 2013 EPS estimate for SunTrust to $3.00 from $2.65, "driven mainly by lower than anticipated mortgage repurchase costs."

The analyst said her price target was "based on a target [price-to-tangible-book] multiple of 1.2x our year-end 2013 tangible book value estimate of roughly $29 per share," adding that "the multiple should expand to be in line with peers given an improved outlook for its [return on tangible common equity] of nearly 11% (in line with the regional bank group average)."

STI Chart STI data by YCharts

Interested in more on SunTrust? See TheStreet Ratings' report card for this stock.


-- Written by Philip van Doorn in Jupiter, Fla.

>Contact by Email.

Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.
3 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
KO $44.66 0.06%
STI $41.79 -0.67%
AAPL $93.34 -1.60%
FB $116.23 -0.43%
GOOG $689.89 -0.16%


Chart of I:DJI
DOW 17,691.74 -139.02 -0.78%
S&P 500 2,054.89 -20.92 -1.01%
NASDAQ 4,749.08 -56.2110 -1.17%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs