Last Update 18 Jun 26
FHN: Mixed Rating Resets And Capital Actions Will Shape Stock Setup
The latest First Horizon stock narrative reflects a modest reset in the Street’s blended $ price target after a series of $1 to $2 revisions, as analysts balance recent downgrades with at least one incremental upward adjustment.
Analyst Commentary
Recent Street research on First Horizon stock shows a split view, with several firms trimming price targets by $1 to $2 and one firm lifting its target. Together, these moves frame a debate around how much execution risk and growth uncertainty is already reflected in the current valuation.
Bullish Takeaways
- Bullish analysts see room for upside in First Horizon if the company can deliver on its core banking execution, arguing that the recent pullback in targets is incremental rather than a reset of the long term story.
- The $1 price target increase signals that at least some on the Street view current levels as reasonable for investors who are comfortable with near term noise and are focused on operational follow through.
- Supportive views often point to valuation, suggesting the stock already reflects a fair amount of caution about growth and returns, which could limit downside if fundamentals hold steady.
- Incremental positive commentary implies that, with disciplined risk management and cost control, First Horizon could align closer to peers that trade on stronger confidence in execution.
Bearish Takeaways
- Bearish analysts have lowered price targets by $1 to $2, signaling concern that prior expectations for First Horizon were too optimistic relative to current execution and growth visibility.
- The recent downgrade at UBS highlights unease about the company’s ability to deliver against earlier assumptions, which can weigh on how investors think about the risk reward profile.
- Several target cuts suggest that some on the Street see limited justification for assigning richer valuation multiples until First Horizon provides clearer evidence of consistent performance.
- JPMorgan’s $2 target reduction underlines worries around how quickly the company can address these issues, leading more cautious investors to focus on potential downside if execution slips.
What’s in the News for First Horizon
- The Board of Directors approved an amendment to Section 3.2 of First Horizon’s bylaws, setting the Board size at 14 members until directors are elected at the 2026 annual meeting of shareholders, and 12 members thereafter.
- From January 1, 2026 to March 31, 2026, First Horizon repurchased 9,751,992 shares, representing 2.01% of shares, for $233 million under its existing buyback program announced on October 27, 2025.
- With these repurchases, First Horizon has completed a total buyback of 19,051,992 shares, representing 3.87% of shares, for $435.74 million under the same program.
- First Horizon plans to redeem all outstanding shares of its 6.600% Fixed-to-Floating Non-Cumulative Perpetual Preferred Stock, Series C, and all related depositary shares on May 1, 2026, at $25.00 per Series C Depositary Share. This corresponds to $10,000 per Series C Preferred share, with no accrued dividends included because the redemption date matches a dividend payment date.
Valuation Changes for First Horizon Stock
- Fair Value: $26.87 is unchanged, indicating no adjustment to the model’s central value estimate for First Horizon stock.
- Discount Rate: increased slightly from 7.108% to about 7.12%, a small increase in the required return assumption.
- Revenue Growth: remains effectively unchanged at about 4.44%, suggesting no revision to the long run top line growth assumption.
- Net Profit Margin: effectively unchanged at about 28.59%, with only an immaterial recalculation in the model.
- Future P/E: increased marginally from 11.44x to about 11.44x, a minimal tweak that leaves the implied earnings multiple broadly steady.
Key Takeaways
- Effective deposit cost management and strategic capital deployment could drive further net interest margin expansion and enhance earnings per share.
- The company's diversified business model and focus on cost discipline may boost earnings stability and shield against economic fluctuations.
- Economic uncertainty and credit risks may hurt First Horizon’s revenue, net interest margins, and earnings as market volatility and potential recession loom.
Catalysts
About First Horizon- Operates as the bank holding company for First Horizon Bank that provides various financial services.
- First Horizon is managing interest-bearing deposit costs effectively, with a 38 basis point reduction, which could lead to net interest margin expansion and positively impact net interest income.
- The company has opportunities for organic loan growth, particularly through its mortgage warehouse segment, which may enhance overall earnings if economic conditions or rate cuts increase demand.
- First Horizon's strategic capital deployment through a share repurchase program may lead to higher earnings per share (EPS) as outstanding shares are reduced.
- Increased focus on cost discipline and expense management can potentially improve net margins and bolster pre-provision net revenue growth.
- The diversified business model, offering countercyclical revenue support, may shield earnings from macroeconomic volatility and ensure a steady revenue stream across various interest rate environments.
First Horizon Future Earnings and Revenue Growth
Assumptions
How have these above catalysts been quantified?
- Analysts are assuming First Horizon's revenue will grow by 4.4% annually over the next 3 years.
- Analysts assume that profit margins will shrink from 29.2% today to 28.6% in 3 years time.
- Analysts expect earnings to reach $1.1 billion (and earnings per share of $2.57) by about June 2029, up from $1.0 billion today.
- In order for the above numbers to justify the price target of the analysts, the company would need to trade at a PE ratio of 11.5x on those 2029 earnings, down from 11.7x today. This future PE is lower than the current PE for the US Banks industry at 11.8x.
- Analysts expect the number of shares outstanding to decline by 6.52% per year for the next 3 years.
- To value all of this in today's terms, we will use a discount rate of 7.12%, as per the Simply Wall St company report.
Risks
What could happen that would invalidate this narrative?- The economic environment is currently shaped by heightened macroeconomic uncertainty due to tariffs and related policies, which could negatively impact revenue and net interest margins as market volatility persists.
- The risk of a potential recession is acknowledged, as further macroeconomic uncertainty is reflected in increased provision expenses and the potential impact on earnings and credit performance.
- The provision expense increased by $30 million, and the ACL to loans ratio increased by 2 basis points, which indicates caution over possible credit losses and may negatively affect future net margins and earnings.
- There is a decrease in fee income, excluding deferred compensation, by $5 million, and a decline in loan yields could continue to pressure revenues and profitability.
- The net charge-offs increased by $16 million, which, coupled with potential further macroeconomic challenges, could put additional stress on credit quality and earnings performance.
Valuation
How have all the factors above been brought together to estimate a fair value?
- The analysts have a consensus price target of $26.87 for First Horizon based on their expectations of its future earnings growth, profit margins and other risk factors.
- However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $30.0, and the most bearish reporting a price target of just $25.0.
- In order for you to agree with the analysts, you'd need to believe that by 2029, revenues will be $3.9 billion, earnings will come to $1.1 billion, and it would be trading on a PE ratio of 11.5x, assuming you use a discount rate of 7.1%.
- Given the current share price of $24.73, the analyst price target of $26.87 is 8.0% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
- We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.
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Disclaimer
AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.