FHN: Capital Actions And Narrower Board Signal Supportive Setup For Future Returns

Analysts have nudged their average price target for First Horizon higher by $0.03 to $26.87, reflecting a blend of recent target cuts from several firms and one offsetting increase as they reassess discount rates, profitability, and future P/E assumptions.

Analyst Commentary

Recent Street research shows a mix of cautious and constructive views on First Horizon as analysts recalibrate price targets around updated assumptions for risk, profitability, and P/E multiples.

Bullish Takeaways

Bullish analysts raising their targets see room for First Horizon to support a slightly higher valuation, even as peers trim estimates, which suggests some confidence in the company’s ability to execute on current plans.
The US$1 target increase from one firm signals that, at least for some, recent pricing still looks reasonable relative to the company’s earnings power and balance sheet profile.
Supportive commentary around price targets implies that, for these analysts, current market expectations may already discount many known risks, leaving potential upside if the company delivers on profitability metrics.

Bearish Takeaways

Several firms lowering targets by US$1 to US$2 indicate that bearish analysts are building in more conservative assumptions for earnings, return on equity, or required discount rates.
JPMorgan’s US$2 target cut, along with other reductions, highlights concern that previous valuation multiples may have been too rich relative to updated risk and growth assumptions.
The downgrade at UBS suggests increased caution around the stock’s risk and reward profile, with more emphasis on execution risks and the potential for pressure on profitability.
Multiple target trims in close succession show that a number of analysts prefer a wider margin of safety, which can weigh on sentiment if investors focus on the possibility of slower progress against prior expectations.

What’s in the News

The board approved an amendment to Section 3.2 of the bylaws, effective April 27, 2026. The amendment sets the board size at 14 directors until the 2026 annual meeting of shareholders, and 12 directors thereafter. (Source: Company bylaws filing)
From January 1, 2026 to March 31, 2026, the company repurchased 9,751,992 shares, representing 2.01% of shares, for US$233 million. This completed a total of 19,051,992 shares repurchased, or 3.87%, for US$435.74 million under the buyback announced on October 27, 2025. (Source: Buyback tranche update)
The company announced the redemption on May 1, 2026 of all outstanding 6.600% Fixed-to-Floating Non-Cumulative Perpetual Preferred Stock, Series C, and related depositary shares at US$25.00 per Series C Depositary Share. This corresponds to US$10,000 per share of Series C Preferred Stock, with no accrued dividends included because the redemption date is also a dividend payment date. (Source: Preferred stock buyback announcement)
The company filed Articles of Amendment to the Amended and Restated Charter on March 6, 2026, establishing the preferences, limitations, and relative rights of the Series H Preferred Stock, effective upon filing. (Source: Charter amendment filing)

Valuation Changes

Fair Value: $26.84 to $26.87, a very small upward adjustment that keeps the modeled value broadly in line with prior estimates.
Discount Rate: 6.98% to 7.11%, a modest increase that reflects slightly higher required return assumptions in the model.
Revenue Growth: 4.45% to 4.44%, a very small reduction that leaves the long term growth assumption largely unchanged.
Net Profit Margin: 28.63% to 28.59%, a minor trim that points to a slightly more cautious view on future profitability levels.
Future P/E: 11.54x to 11.44x, a small reduction that indicates a slightly lower valuation multiple being applied to projected earnings.

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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.What are the underlying business or industry changes driving this perspective?

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 Earnings and Revenue Growth

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, up from 11.4x today. This future PE is about the same as the current PE for the US Banks industry at 11.5x.
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 7.11%, 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 $24.0, the analyst price target of $26.87 is 10.7% higher.
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.

Analysts Mixed on First Horizon Outlook as Valuation Estimate Eases and Share Buyback Announced