SunTrust Banks: S&P Intraday Laggard

NEW YORK ( TheStreet) -- SunTrust Banks ( STI) was the worst-performing stock in the S&P 500 on Friday morning.

The S&P 500 was falling 11.55 points, or 0.83%, to 1,376.02.

Shares of SunTrust fell 3.99% Friday morning to $22.61.

"We see limited potential for further outperformance for regional banks (up 25% YTD vs. 10% for SPX) as loan growth is set to disappoint relative to expectations and we see risk to margins from further competition (absent higher rates)," Goldman Sachs analysts wrote in a report Wednesday.

SunTrust is scheduled to report first-quarter earnings on April 23. Analysts, on average, anticipate earnings of 34 cents a share on revenue of $2.1 billion.

"Much of the earnings volatility at SunTrust in recent quarters has been connected to mortgage repurchase requests and the related expenses," Oppenheimer analysts wrote in an April 4 report. "This expense was $215M in 4Q12 and we now expect it to fall to $125M in 1Q12 and be pretty consistent with the third quarter."

Two of the biggest U.S. banks, JPMorgan Chase ( JPM) and Wells Fargo ( WFC), reported strong first-quarter earnings on Friday, but the shares were declining.

The Street's director of research, Stephanie Link, said Thursday that for investors who don't want to worry about banks' exposure to Europe, smaller banks such as SunTrust and BB&T ( BBT) are "very attractive."

SunTrust has an estimated price-to-earnings ratio for next year of 8.65 times; the average for banks is 13.63. For comparison, BB&T and M&T ( MTB) both have higher forward P/Es of 10.55 and 11.42, respectively.

Seventeen of the 38 analysts who cover SunTrust rated it buy. Fifteen analysts gave the stock a hold rating and six rated it sell.

TheStreet Ratings gives SunTrust a C grade and hold rating. The stock rose 28.53% year to date.

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-- Written by Alexandra Zendrian

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