SunTrust's shares closed at $29.05 Friday. The shares traded for 1.1 times their reported March 31 tangible book value of $26.33, and for 10.0 times the consensus 2014 earnings estimate of $2.90 a share, among analysts polled by Thomson Reuters. The consensus 2013 EPS estimate is $2.68.
Miller on Monday upgraded SunTrust to an "outperform" rating from a "market perform" rating and raised his price target for the shares to $37 from $30.00. The analyst said in a note to clients that the bank's "meaningful progress" in working through mortgage repurchase demands, resolution of credit problems and "strong fee income platform," should allow its share price to reflect a higher multiple to tangible book value.
Miller's price target for SunTrust equates to 1.3 times an estimated year-end 2013 tangible book value of $28.50.
SunTrust reported first-quarter net income available to common shareholders of $340 million, or 63 cents a share, compared to $350 million, or 65 cents a share, in the fourth quarter, and $245 million, or 46 cents a share, in the first quarter of 2012. Please see TheStreet's earnings coverage for a detailed review of the company's financial results. A great deal of coverage for regional banks this earnings season has centered around the decline in mortgage revenue from elevated fourth-quarter levels, as refinancing volume has declined, and rising long-term market rates have led to a decline on lenders' gains on the sale of new mortgage loans, mainly to Fannie Mae (FNMA) and Freddie Mac (FMCC). SunTrust's mortgage production revenue in the first quarter was $159 million, declining from $241 million the previous quarter, but increasing from $63 million a year earlier. The most positive developments for SunTrust were a continued decline in credit costs, and further signs that the company has put its risk of losses on legacy mortgage repurchase demands in the rear view mirror. SunTrust's pretax income was directly boosted by a decline in the provision for credit losses to $212 million in the first quarter from $328 million in the fourth quarter and $317 million in the first quarter of 2012. The provision is the amount added to loan loss reserves each quarter, to cover anticipated losses.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV