CFRA, an independent research provider, has provided MT Newswires with the following research alert. Analysts at CFRA have summarized their opinion as follows:
We decrease our 12-month target price by $15 to $160, 12.5x our 2024 EPS estimate, a premium to the peer average of 7.8x given PNC’s more stable operating model. We increase our 2023 EPS estimate by $0.06 to $14.04 and lower 2024’s by $1.38 to $12.78 given rising funding costs and likely net interest margin compression. PNC posted Q3 adj. EPS of $3.60 vs. $3.78 a year ago, $0.46 above consensus. Strong results were driven by provisions for credit losses of just $129 million, the lowest level in five quarters. Impressively, net charge-offs (NCOs) actually fell 9 bps Q/Q to 0.15%, although deterioration was seen in PNC’s office portfolio (2.7% of total loans), with NCOs surging to 1.6%. Weakness was seen in deposit balances (-1% Q/Q) as noninterest-bearing balances fell 5%. Still, we view PNC as well positioned for a tough operating environment given its robust capital levels (9.8% CET1 ratio vs. regulatory minimum of 7.0%) and fewer unrealized losses than peers in its securities portfolio.