Is Pinnacle Financial Partners (PNFP) a Buy at a 13.7% Discount to Fair Value?

The stock of Pinnacle Financial Partners (PNFP) currently trades at a 13.7% discount to its estimated fair value of $110, with a Q4 2025 closing price of $97.20 as of January 6, 2026. This valuation gap raises a critical question for investors: Is PNFP a compelling buy at this price, given the transformative impact of its completed $8.6 billion merger with Synovus and the company's projected earnings growth?

Merger Synergies and Strategic Positioning

The Synovus merger, finalized on January 2, 2026, created a regional banking giant with $117.2 billion in assets, $95.7 billion in deposits, and $80.4 billion in loans as of September 30, 2025. Structured as an all-stock merger of equals, the deal positions Pinnacle shareholders to own 51.5% of the combined entity, while Synovus shareholders hold 48.5%. The integration is progressing on schedule, with full system and brand conversions expected by mid-2027.

The merger's strategic rationale hinges on combining Pinnacle's relationship-driven client model with Synovus' operational scale and talent pool. Analysts project $250 million in cost synergies and $100–$130 million in revenue synergies, with 50% of these benefits achievable in 2026 and 75% by 2027. These synergies are expected to drive 21% operating earnings accretion by 2027 and a tangible book value earn-back period of 2.6 years. However, the integration is not without challenges. The $675 million in pre-tax merger expenses and $45 million in regulatory costs highlight the magnitude of execution risks.

Valuation Metrics and Fair Value Discrepancy

PNFP's current valuation multiples appear undemanding relative to its growth potential. As of Q4 2025, the stock trades at a 12.3x P/E ratio and 1.11x P/B ratio, significantly below its estimated fair P/E of 25.7x. Analysts from DA Davidson apply a 1.6x tangible book value multiple to 2026's estimated tangible book value of $66.94, implying a fair value of $107.10-close to the $110 consensus.

The 13.7% discount to fair value reflects market skepticism about the timeline for realizing synergies. While the merger is complete, full integration remains a work in progress, and analysts caution that delays could cap near-term upside. Additionally, the stock's current P/E of 12.3x lags behind the U.S. bank sector average of 11.8x, suggesting PNFP is already priced for modest outperformance but not for the full realization of its growth potential.

Earnings Growth and Revenue Momentum

PNFP's earnings and revenue growth projections are robust. For Q4 2025, the company is forecast to grow earnings and revenue by 48.2% and 47.2% annually, respectively. By 2028, analysts project an EPS of $10.77, translating to a forward P/E of 5.5x. This trajectory is underpinned by strong deposit and loan growth: 2025 deposit growth guidance has been raised to 8–10%, net interest income to 13–14%, and noninterest income to 20–22%.

The merger's impact on revenue is also notable. The combined entity's 400+ locations across nine Southeastern states position it to capture market share in a region with strong economic fundamentals. Moreover, the integration of Synovus' FIS platform into Pinnacle's Jack Henry system, though complex, is expected to enhance operational efficiency and client service capabilities.

Risks and Considerations

Despite the compelling growth story, investors must weigh several risks. First, the integration of two large banks is inherently complex. Delays in system conversions or brand consolidation could disrupt client relationships and defer synergy realization. Second, the $675 million in merger-related expenses and $45 million in regulatory costs could pressure short-term earnings. Third, the stock's current valuation assumes successful execution of the merger's strategic goals-a bet that may not pay off if integration challenges persist.

Conclusion: A Buy at a Discount, But With Caution

PNFP's 13.7% discount to fair value reflects both the market's skepticism about integration execution and the stock's undemanding valuation multiples. While the merger's synergies and growth projections justify a higher valuation, the path to unlocking this potential is not without hurdles. For investors with a medium-term horizon and a tolerance for integration risks, PNFP offers an attractive entry point. However, those seeking immediate upside may prefer to wait for clearer signs of post-merger performance.

In the end, PNFP's valuation appears to reward patience. The stock's current price implies a 16.89% potential upside to the $113.46 average one-year price target, a margin that accounts for both growth and risk. For disciplined investors, this discount to fair value-coupled with the company's strategic positioning and earnings momentum-makes PNFP a compelling case for a cautious "buy."