Last Update 06 Jul 26
Fair value Increased 2.15%FHN: Higher Price Assumptions And Buybacks Will Shape Fairly Valued Outlook
Analysts have nudged their average price target for First Horizon higher to around $27, reflecting updated assumptions for slightly stronger revenue growth, profit margins, and future P/E multiples, alongside broadly constructive regional bank research commentary from several firms.
Analyst Commentary
Recent Street research around First Horizon highlights a mix of optimism on earnings execution and loan growth, along with a more cautious tone on how the stock should be valued against a higher-for-longer rate backdrop and evolving guidance.
Bullish Takeaways
- Bullish analysts are lifting price targets into the mid to high US$20s, signaling greater confidence that First Horizon can support current P/E assumptions with its earnings profile.
- Several research previews flag solid Q2 earnings trends for regional banks, with expectations for mid single digit annualized growth in both loans and deposits. This supports a constructive view on First Horizon's revenue base and balance sheet positioning.
- Commentary points to ongoing loan growth momentum and stable credit trends. If sustained, these factors can help First Horizon defend margins and support valuation multiples.
- Expectations for improved fee income, continued expense control, and share repurchase activity suggest potential for positive operating leverage. Bullish analysts view this as support for higher fair value estimates.
Bearish Takeaways
- Some research remains cautious, using Neutral or equivalent ratings even as targets move higher. This signals that, at current levels, upside may depend heavily on precise execution rather than broad sector tailwinds.
- Higher-for-longer interest rates keep the focus on forward guidance. Any pressure on funding costs or margins could challenge the earnings outlook that current price targets assume.
- At least one firm has recently lowered its price target and another has downgraded the stock, suggesting that not all analysts are aligned on the risk and reward balance for First Horizon.
- With expectations for bank outperformance and regional strength already built into some models, bearish analysts see the risk that even solid results may not justify meaningfully higher valuation multiples if guidance disappoints.
What’s in the News for First Horizon
- First Horizon Corporation (NYSE: FHN) has been added to the Russell 1000 Value-Defensive Index, highlighting its inclusion in a category focused on value oriented and defensive stocks. (Source: Key Developments)
- First Horizon has also been added to the Russell 1000 Defensive Index, placing the stock among companies grouped for more defensive characteristics within the broader U.S. equity market. (Source: Key Developments)
- The Board of Directors unanimously approved an amendment to Section 3.2 of First Horizon’s Bylaws, setting the Board size at fourteen members until directors are elected at the 2026 annual meeting of shareholders, and at twelve members thereafter. (Source: Key Developments)
- From January 1, 2026 to March 31, 2026, First Horizon repurchased 9,751,992 shares, or 2.01% of its stock, for US$233 million. This brought total repurchases under the buyback announced on October 27, 2025 to 19,051,992 shares, or 3.87%, for US$435.74 million. (Source: Key Developments)
Valuation Changes
- Fair Value: The updated fair value estimate has risen slightly from $26.87 to $27.45 per share.
- Discount Rate: The discount rate has edged down slightly from 7.12% to 7.11%.
- Revenue Growth: Assumed revenue growth has moved up modestly from 4.44% to 4.60%.
- Profit Margin: Assumed net profit margin has increased slightly from 28.59% to 28.79%.
- Future P/E: The future P/E multiple assumption has ticked higher from 11.44x to 11.55x.
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 4.6% annually over the next 3 years.
- Analysts assume that profit margins will shrink from 29.2% today to 28.8% in 3 years time.
- Analysts expect earnings to reach $1.1 billion (and earnings per share of $2.57) by about July 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 11.6x on those 2029 earnings, down from 12.3x today. This future PE is lower than the current PE for the US Banks industry at 12.2x.
- 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 $27.45 for First Horizon based on their expectations of its future earnings growth, profit margins and other risk factors.
- 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 11.6x, assuming you use a discount rate of 7.1%.
- Given the current share price of $25.85, the analyst price target of $27.45 is 5.8% 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.
Have other thoughts on First Horizon?
Create your own narrative on this stock, and estimate its Fair Value using our Valuator tool.
Create NarrativeHow well do narratives help inform your perspective?
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.