What happened
Shares of Truist Financial (TFC 2.05%) dropped by 5.9% on Friday. The stock ended the session at $31.49, down almost 27% year to date. The market was up marginally for the day as the S&P 500, the Dow Jones Industrial Average, and the Nasdaq Composite each rose by around 0.1%.
So what
Truist Financial, the seventh-largest bank in the U.S. by assets, reported first-quarter earnings on Wednesday that missed analysts' consensus expectations. That resulted in several analysts lowering their price targets on Truist Friday, which helped push its share price lower.
Overall, net income was up 6% year over year to $1.4 billion in Q1, while revenue was up 15% to $6.2 billion. Further, average loans and leases increased 2% year over year to $326 billion, driving net interest income up 22% year over year to $3.9 billion. Truist also saw growth in its commercial and industrial loan portfolio.
Average deposits dipped 1.2% to $408 billion, while the average cost of deposits was up 46 basis points to 1.12%. Its Common Equity Tier 1 capital ratio was 10.6%, up from 10.5% in the previous quarter.
Those numbers were fairly solid, but several analysts, including those from Morgan Stanley, Piper Sandler, RBC Capital, and Credit Suisse, lowered their price targets for Truist based on their expectations for economic headwinds.
However, they all held their ratings on the bank steady, with Piper Sandler and RBC keeping their outperform ratings and Morgan Stanley and Credit Suisse maintaining neutral or equal-weight ratings.
Now what
While all of the analysts lowered their price targets, they still expect Truist stock to gain ground this year. The lowest price target came from Credit Suisse at $40 per share -- 26% higher than Truist's current price of $31.49 per share.
The highest target, forecast both by Piper Sandler and RBC, was $46 per share. That would equate to a 46% gain in the next 12 months.
Truist is extremely cheap right now, trading below its book value, with a price-to-book ratio of 0.8 and a price-to-earnings ratio of around 7.5. Big banks should benefit following the March banking crisis, and while economic headwinds are a concern, Truist looks like a decent long-term buy at this valuation.
