First Horizon's shares closed at $11.34 Tuesday, down 3% this year, after a return of 20% during 2012. The shares trade for 1.4 times tangible book value and for 12.6 times the consensus 2015 EPS estimate of 87 cents. The consensus 2014 EPS estimate is 71 cents.
"We believe FHN has two significant mortgage related settlements on the horizon: 1) FHA Investigation and 2) Private Label Securitization, but even after absorbing the losses, we estimate FHN remains 10% cheaper on P / TBV and P/E vs. peers.," Siegnthaler wrote. He also sees the bank as one of the best positioned to see a significant rise in net interest income once the federal funds rate begins to rise.
The analyst's price target for First Horizon is $13, or 14.4 times his 2015 EPS estimate of 90 cents, and 1.6 times year-end 2014 tangible book value, "in line with peers."
This chart shows the stock performance of KeyCorp and First Horizon against the KBW Bank Index and the S&P 500 since the end of 2011:
data by YCharts
FirstMerit Stock Has 32% Upside, Says Oppenheimer
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