Synovus: Financial Loser

Updated to include information about analyst downgrades.

NEW YORK ( TheStreet) -- Synovus ( SNV), Huntington Bancshares ( HBAN) and a handful of regional competitors were getting clobbered on Thursday following an analyst downgrade on M&A potential.

In recent trading, Synovus was shedding 3.1% at $2.80, after Merrill analyst L. Erika Penala downgraded the stock to underperform from neutral. She maintained her $2.75 price target, suggesting that while Synovus is a takeout target, because of a recent rally in its stock, a potential deal may come below the bank's current stock price.

Penala also downgraded Huntington to neutral from buy, saying the stock is "now fairly valued on standalone EPS power." Penala upped her price target to $7.75, saying Huntington could be an acquirer in the near-term. However, she noted that deal values have been recovering, suggesting that the price of a buyout might not be a bargain.

"We see HBAN as an acquirer not a seller nearterm, and a quicker recovery of deal multiples has tempered our enthusiasm for earnings accretion," said the analyst.

In addition to Synovus, Penala thinks Associated Banc-Corp ( ASBC) and Bank of Hawaii ( BOH) are targets "whose stocks already appear to be fully reflecting potential takeover value." Associated was recently up 0.3% at $14.92, while Bank of Hawaii was down 0.2% at $47.50.

On the flip side, the analyst cited First Horizon ( FHN), City National ( CYN) and Zions ( ZION) as takeout targets whose share prices have room to sail higher. First Horizon was recently down 0.7% at $$11.80; City National was up 0.5% at $61.18; and Zions was down 0.3% at $23.54.

Separately, Guggenheim Partners analyst David Darst downgraded Webster Financial ( WBS) from neutral to buy on valuation concerns, saying the shares are near his $24 target.

"The shares have increased 18% year to date--outperforming peers --as Webster repaid TARP and completed a capital raise in late 2010, and the fundamental outlook is improving and balance sheet risk has been reduced, in our view," said Darst.

Nonetheless, the stock was recently up 0.3% at $23.41.

The regional downgrades were weighing on other stocks like Fifth Third ( FITB), which was down 2.2% at $15.04, SunTrust ( STI) was down 1.6% at $31.82, People's United ( PBCT) was down 1.4% at $13.34 and PNC Financial Services ( PNC) was down 0.9% at $64.30. The KBW Regional Bank Index was down 0.4% at 55.08, with the large-cap KBW Bank Index down 0.6% at 55.20.

While those stocks and other regionals were losing ground, Bank of America ( BAC) was in positive territory despite news that it had received a subpoena over Countrywide's legacy "VIP" loan program.

Among other large-cap bank stocks, Wells Fargo ( WFC) was recently down 0.9% at $33.01 as concerns lingered about the abrupt and unexplained departure of its CFO Howard Atkins last week. JPMorgan Chase ( JPM) was down 0.3% at $47.82 and Citigroup ( C) was bucking the trend, rising 0.5% in recent trading at $4.92.

Meanwhile, the broader market remained near pre-crisis highs on positive economic trends.

-- Written by Lauren Tara LaCapra in New York.

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Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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