Over the past year, regional bank stocks have generally been trending higher. That hasn't been the case, however, for Tennessee-based Pinnacle Financial Partners (PNFP +0.13%). A key reason for Pinnacle's 20% decline has been the market's reaction to a now-completed merger with one of its competitors.
Namely, investors were concerned about how this deal would dilute Pinnacle's tangible book value, as well as execution risks related to this deal.
However, following its steady slide, the stock's valuation arguably now accounts for this uncertainty. In the event that post-merger synergies are achieved, the resultant positive impact on earnings could drive a strong recovery for shares.
NYSE: PNFP
Key Data Points
For Pinnacle Financial Partners, a new catalyst emerges
Last July, Pinnacle Financial Partners announced its plans to merge with Synovus Financial in an $8.6 billion all-stock merger. The transaction closed on Jan. 2. Synovus, headquartered in Columbus, Georgia, is similar to Pinnacle in that it is a regional bank with operations primarily in the southeastern United States.
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For now, Pinnacle and Synovus will continue operating under their respective brands, but in 2027, they will consolidate under the Pinnacle brand. With this geographic overlap, there is a great opportunity for the combined financial institution to achieve cost and growth synergies.
A path to past highs, then on to loftier price levels?
As noted in Pinnacle's fourth-quarter 2025 investor presentation, the bank expects to realize $250 million in annualized cost savings, plus up to $130 million in post-merger revenue synergies, over the next few years.
Pinnacle appears well-positioned to meet, or even beat, sell-side analyst earnings estimates. The current consensus calls for earnings per share (EPS) of $10.17 and $11.74 for 2026 and 2027, respectively. If achieved, potential upside could be substantial, especially if the stock experiences valuation expansion.
Currently valued at around 10 times forward earnings, even a rerating to a low-teens forward P/E would push the stock not just back to past highs of around $125 per share, but toward even loftier price levels.
