PNC Financial Services to Acquire BBVA’s U.S. Arm for Over $10 Billion; Target Price $138

PNC Financial Services Group, one of the largest diversified financial services institutions in the United States, said it is in the advanced stage to acquire U.S. business of Spanish multinational financial services company BBVA for over $10 billion, according to the Wall Street Journal.

If a deal is struck, it would be the biggest bank merger since the global financial crisis of 2008 and create the fifth-largest retail bank with over $550 billion in assets in the United States. The WSJ reported the deal could be announced as soon as Monday.

PNC Financial shares closed 1.47% higher to $122.78 on Friday. However, the stock is down over 20% so far this year.

PNC Financial Stock Price Forecast

Eleven equity analysts forecast the average price in 12 months at $119.71 with a high forecast of $138.00 and a low forecast of $88.00. The average price target represents a -2.50% decrease from the last price of $122.78. From those 11 analysts, five rated “Buy”, five rated “Hold” and one rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of 109 with a high of $154 under a bull-case scenario and $79 under the worst-case scenario. The firm currently has an “Equal-weight” rating on the diversified financial services organization’s stock. PNC Financial Services Group had its price objective hoisted by Credit Suisse Group to $117 from $115. Credit Suisse Group currently has a neutral rating on the financial services provider’s stock.

Several other analysts have also recently commented on the stock. JP Morgan increased their price objective on shares of PNC Financial Services Group to $120 from $110 and gave the company an overweight rating. PNC Financial Services Group had its target price increased by Bank of America to $138 from $135. The brokerage currently has a buy rating on the financial services provider’s stock.

Analyst Comments

“PNC generated $6B in capital from the sale of BlackRock (BLK) stake. What’s next? Bank M&A is now a key debate for the stock, especially as excess capital and liquidity pressures returns near term. We stay on the sideline as shares already largely reflect the value creation, we believe an accretive deal could deliver,” said Betsy Graseck, equity analyst at Morgan Stanley.

“PNC going national with multiple initiatives. Middle market C&I expansion well underway includes eight new markets in 2017-2019 and two additional markets in 2020. Funded by national retail digital strategy. M&A could accelerate this growth. Excess capital provides valuable hedge, giving PNC optionality regardless of the economic environment,” Graseck added.

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