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PNC Financial

PNC  shares rose about 3% on Friday after the financial services company reported better-than-expected earnings in the first quarter of this year and said its profit rose on significant provision recapture, reflecting improved macroeconomic expectations.

The Pittsburgh-based regional bank reported adjusted earnings per share of $4.10, beating Wall Street’s expectations of $2.75 per share, which represents year-over-year growth of over 110% from $1.95 per share seen in the same quarter a year ago.

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Net income of $1.8 billion increased by $370 million, or 25%, reflecting the impact of a substantial provision recapture. Total revenue of $4.2 billion increased $12 million compared with the fourth quarter of 2020 as higher noninterest income more than offset a decrease in net interest income. In comparison with the first quarter of 2020, total revenue decreased by $116 million due to lower net interest income.

PNC Financial shares, which slumped 6.6% last year, rebounded about 20% so far this year. At the time of writing, the stock traded about 3% higher at $179.29 on Friday.

Executive Comments

PNC had a solid start to 2021. We grew revenue, managed expenses and achieved positive operating leverage. We recorded a substantial provision recapture, saw improvement in our credit metrics and capital and liquidity are at record levels. Looking ahead we see significant growth opportunities as the economy recovers and rates improve,” said Bill Demchak, PNC Chairman, President and Chief Executive Officer.

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PNC Financial Stock Price Forecast

Twelve analysts who offered stock ratings for PNC Financial in the last three months forecast the average price in 12 months of $176.18 with a high forecast of $192.00 and a low forecast of $157.00.

The average price target represents a -1.86% decrease from the last price of $179.51. Of those 12 analysts, three rated “Buy”, nine rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $182 with a high of $220 under a bull scenario and $100 under the worst-case scenario. The firm gave an “Equal-weight” rating on the bank holding company’s stock.

Several other analysts have also updated their stock outlook. BofA Global Research raised the price objective to $205 from $199. Barclays upped the price target to $182 from $171. Goldman Sachs lifted the price target to $184 from $166. Deutsche Bank increased the target price to $190 from $157. UBS raised the price target to $159 from $142. Credit Suisse lifted the stock price forecast to $170 from $157.

Analyst Comments

PNC accelerated its national expansion across the sunbelt with BBVA USA purchase, the combined company’s footprint now extends through nearly 30 states and the District of Columbia and will have a presence in 29 of the top 30 U.S. MSAs. What’s next? Merger integration and execution on the ~$900m of net cost saves in 2022 are key to the stock going forward,” noted Betsy Graseck, equity analyst at Morgan Stanley.

“With net cost saves in the price, next leg up on meaningful revenue acceleration as PNC increases its fee contribution from new MSAs and further expands into new markets. We stay Equal-weight as we prefer stocks with larger benefit from rising rates and improving consumer credit as the COVID-19 vaccine is distributed through 2021.”

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