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Will This Upgrade Help Synovus Financial (SNV) Stock Today?

Stocks in this article: SNV

Story updated at 10 a.m. to reflect market activity.

NEW YORK (TheStreet) -- Synovus Financial (SNV) was upgraded to "equal-weight" by Morgan Stanley (MS) Thursday.

Synovus gained 0.9% to $3.24 in morning trading.

Thefirm set a price target of $3.30 for the regional bank. Morgan Stanley analysts said the upgrade is a valuation call, as Synovus' credit is improving.

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Separately, TheStreet Ratings team rates SYNOVUS FINANCIAL CORP as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate SYNOVUS FINANCIAL CORP (SNV) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its increase in net income, expanding profit margins and solid stock price performance. However, as a counter to these strengths, we find that the company's return on equity has been disappointing."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Commercial Banks industry. The net income increased by 63.7% when compared to the same quarter one year prior, rising from $29.57 million to $48.42 million.
  • The gross profit margin for SYNOVUS FINANCIAL CORP is currently very high, coming in at 87.23%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 16.53% is above that of the industry average.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.
  • Despite the weak revenue results, SNV has outperformed against the industry average of 13.2%. Since the same quarter one year prior, revenues slightly dropped by 0.8%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. When compared to other companies in the Commercial Banks industry and the overall market, SYNOVUS FINANCIAL CORP's return on equity is below that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: SNV Ratings Report

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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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