Story updates at 10 a.m. to reflect market activity.
Pinnacle Financial Parnters gained 0.2% to $36.95 in morning trading.
The firm maintained its $37 price target for the regional bank. The downgrade was a valuation call as the stock has increased 33% in the past six months.
"PNFP is the premier commercial bank in the Nashville MSA, with a market-share-moving strategy that supports above-average organic growth and very high levels of both customer and employee satisfaction and retention," analyst Kevin Reynolds wrote. "Over the past six months, PNFP shares have increased about 33% (+14% year-to-date) easily outperforming the average increase of 23% for WSI Southern Banks and 16% for the NASDAQ Bank Index over this same period. PNFP's performance suggests a premium valuation is warranted; however, the current 10% to 15% premium on 2015E EPS appears reasonable, limiting potential upside in the near-term, hence our downgrade to Hold at this time."
Separately, TheStreet Ratings team rates PINNACLE FINL PARTNERS INC as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:
"We rate PINNACLE FINL PARTNERS INC (PNFP) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth, compelling growth in net income, expanding profit margins and solid stock price performance. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 15.8%. Since the same quarter one year prior, revenues slightly increased by 1.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- PINNACLE FINL PARTNERS INC has improved earnings per share by 29.4% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, PINNACLE FINL PARTNERS INC increased its bottom line by earning $1.67 versus $1.11 in the prior year. This year, the market expects an improvement in earnings ($1.95 versus $1.67).
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Commercial Banks industry average. The net income increased by 30.6% when compared to the same quarter one year prior, rising from $11.73 million to $15.32 million.
- The gross profit margin for PINNACLE FINL PARTNERS INC is currently very high, coming in at 90.70%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 25.15% significantly outperformed against the industry average.
- Powered by its strong earnings growth of 29.41% and other important driving factors, this stock has surged by 65.59% over the past year, outperforming the rise in the S&P 500 Index during the same period. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
- You can view the full analysis from the report here: PNFP Ratings Report