In a report released yesterday, Betsy Graseck from Morgan Stanley maintained a Sell rating on PNC Financial, with a price target of $186.00.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
Betsy Graseck’s rating is based on several factors surrounding PNC Financial’s recent acquisition of FirstBank Holding Co. The acquisition, while strategically beneficial in terms of expanding PNC’s market share in Colorado, comes with a significant purchase price of $4.125 billion, which is approximately 2.4 times the tangible book value. This high valuation could pose risks if the anticipated cost savings and revenue synergies do not materialize as expected.
Additionally, while the acquisition is projected to deliver a 25% internal rate of return, there are uncertainties related to the integration process and the realization of estimated $175 million in cost savings. These factors, combined with the potential for increased competition in the commercial lending space, contribute to Graseck’s cautious outlook and her decision to rate PNC Financial with a Sell.
Graseck covers the Financial sector, focusing on stocks such as Citigroup, Bank of America, and PNC Financial. According to TipRanks, Graseck has an average return of 4.7% and a 50.60% success rate on recommended stocks.