Citi Raises First Horizon Price Target to $26, Maintains Buy Rating

Citi raised First Horizon's price target to $26 from $25 and maintained a Buy rating. The firm believes upcoming interest rate cuts by the Federal Reserve can serve as positive catalysts for regional bank valuations.

Citi has raised its price target for First Horizon (FHN) from $25 to $26, maintaining a Buy rating on the stock [1]. The firm anticipates that potential interest rate cuts by the Federal Reserve could act as beneficial catalysts for the valuation of regional banks, including First Horizon.

First Horizon Corp, the parent company of First Tennessee Bank, operates as a prominent regional bank with approximately 200 branches across Tennessee. The company is structured into several reportable segments: Commercial, Consumer & Wealth, Wholesale, and Corporate. The majority of its revenue is derived from the Commercial, Consumer & Wealth segment, which offers a range of financial products and services, including traditional lending and deposit-taking, to both commercial and consumer clients in the southern United States and other selected markets. With a market capitalization of $11.42 billion, First Horizon is positioned within the Financial Services sector, specifically in the Banks industry.

First Horizon's financial health can be assessed through several key metrics:
- Revenue Growth: The company reported a revenue of $3.1 billion, with a 1-year growth rate of 4.9%. Over the past three years, revenue growth has been modest at 1.6%, while the 5-year growth rate shows a slight decline of 0.6%.
- Profitability: The net margin stands at 27.19%, indicating a strong ability to convert revenue into profit. The earnings per share (EPS) is reported at $1.55, with a notable 1-year earnings growth of 32.3%.
- Balance Sheet Strength: The debt-to-equity ratio is relatively low at 0.18, suggesting a conservative approach to leveraging. However, the company has issued $1.2 billion in new debt over the past three years, which is a point of consideration for investors.
- Insider Activity: Recent insider activity shows two insider selling transactions with no insider buying over the past three months, totaling 48,295 shares sold. This could be a potential warning sign for investors.

First Horizon's business performance is characterized by its revenue trends and operational efficiency:
- Revenue Trends: The company has experienced a mixed revenue growth pattern, with a 10-year growth rate of 1.5%. The Commercial, Consumer & Wealth segment remains the primary revenue driver.
- Operational Efficiency: The company's return on equity (ROE) is 9.53%, which is slightly below the median of 9.98% but indicates efficient use of equity capital.

As a regional bank, First Horizon is influenced by macroeconomic factors such as interest rate changes, which can impact its lending and deposit-taking activities.

First Horizon's valuation metrics and market sentiment provide insights into its current trading position:
- Valuation Metrics: The price-to-earnings (P/E) ratio is 14.52, with a forward P/E of 12.89, suggesting a reasonable valuation relative to earnings. The price-to-book (P/B) ratio is 1.34, close to its 2-year high of 1.39.
- Analyst Targets: The average target price is $24.62, with a recommendation score of 2.1, indicating a generally favorable outlook from analysts.
- Technical Indicators: The relative strength index (RSI) of 59.96 suggests that the stock is neither overbought nor oversold. The stock's moving averages (20-day, 50-day, and 200-day) are $21.84, $21.55, and $20.3, respectively.
- Institutional Ownership: Institutional investors hold 84.89% of the shares, reflecting strong institutional confidence in the company.

Assessing the risks associated with First Horizon involves examining its financial health and market conditions:
- Financial Health Grades: The Piotroski F-Score of 8 indicates a very healthy financial situation, while the Beneish M-Score of -2.53 suggests that the company is unlikely to be a manipulator.
- Sector-Specific Risks: As a bank, First Horizon is exposed to risks related to interest rate fluctuations and regulatory changes.
- Volatility and Beta: The stock's beta of 1.05 indicates slightly higher volatility compared to the market. The 3-year volatility is 41.23%, reflecting potential price fluctuations.

In conclusion, First Horizon Corp presents a mixed financial picture with strong profitability and a healthy balance sheet, but with some cautionary signals such as insider selling and new debt issuance. Investors should consider these factors alongside the broader economic environment and sector-specific risks when evaluating the stock.

References:
[1] https://www.gurufocus.com/news/3078799/first-horizon-fhn-price-target-raised-by-citi
[2] https://www.cnn.com/2025/08/22/economy/fed-powell-jackson-hole-speech
[3] https://www.ainvest.com/news/citi-reaffirms-buy-rating-horizon-26-price-target-2508/