Is Texas Capital Bancshares a Buy or a Hold? Decoding the Strategic Implications of TD Cowen's $98 Price Target

The Case for Caution: Why TD Cowen's “Hold” Might Be Wiser Than It Seems

Regional banks are navigating a precarious tightrope in 2025: balancing the need to capitalize on high-interest-rate environments with the risks of regulatory scrutiny and deposit flight. Texas Capital Bancshares (TCBI) has been a standout performer in this landscape, but TD Cowen's recent “Hold” rating and $98 price target—despite the stock trading at $86.01 as of September 24, 2025—suggest a nuanced view. Is this a signal of undervaluation, or a reflection of conservative expectations in a sector still reeling from the 2023 banking crisis?

Let's break it down.

Strategic Moves: A Foundation for Growth

Texas Capital has made aggressive strides to position itself as a leader in niche markets. The acquisition of a $400 million healthcare loan portfolioTexas Capital Bancshares, Inc. Shares Strategic Business Update^[1] and the launch of Texas Capital Direct LendingTexas Capital Bancshares, Inc. Shares Strategic Business Update^[1] demonstrate a clear focus on middle-market clients in high-growth sectors like healthcare and energy. These initiatives align with the company's 2021 strategic plan, which emphasized sector-specific expertise and fee-based revenue diversification.

Moreover, the bank's balance sheet repositioning—selling $1.24 billion in low-yield securities and repurchasing higher-yield alternativesTexas Capital Bancshares, Inc. Shares Strategic Business Update^[1]—is expected to boost net interest income by late 2024. Coupled with $30 million in projected 2025 cost savingsTexas Capital Bancshares, Inc. Shares Strategic Business Update^[1], these moves suggest a disciplined approach to profitability.

Valuation Metrics: A Tale of Two Perspectives

On the surface, TCBI's valuation appears attractive. Its forward P/E ratio of 12.66Texas Capital Bancshares (TCBI) Statistics & Valuation - Stock Analysis^[2] is significantly lower than its trailing P/E of 34.13Texas Capital Bancshares (TCBI) Statistics & Valuation - Stock Analysis^[2], implying optimism about future earnings. However, Jefferies' recent analysis paints a more cautious picture. The firm notes that TCBI trades at 11.8 times its 2026 projected earnings—well above the 9.5 average for peersTexas Capital Bancshares, Inc. Shares Strategic Business Update^[1]. This premium, Jefferies argues, is hard to justify given TCBI's underperformance in return metrics like ROE and ROA compared to its regional banking rivalsTexas Capital Bancshares, Inc. Shares Strategic Business Update^[1].

TD Cowen's $98 price target implies a 13.7% upside from current levels, a modest but not unreasonable return. Yet this target must be viewed through the lens of broader market dynamics. Regional banks are still grappling with the fallout of the 2023 crisis, and investors remain wary of overleveraged balance sheets. TCBI's strong capital position and deposit cost reductionsTexas Capital Bancshares, Inc. Shares Strategic Business Update^[1] are positives, but they may not be enough to offset sector-wide caution.

The Bigger Picture: Regional Banking in 2025

The regional banking sector is in flux. While TCBI's strategic initiatives—like expanding SBA lending and treasury solutionsTexas Capital Bancshares, Inc. Shares Strategic Business Update^[1]—are commendable, they must compete with tech-driven fintechs and the sheer scale of national banks. The Federal Reserve's potential rate cuts in 2025 could further compress net interest margins, adding pressure to TCBI's profitability.

Jefferies' $80 price target for 2026Texas Capital Bancshares, Inc. Shares Strategic Business Update^[1] and the current analyst consensus of $83.25Texas Capital Bancshares (TCBI) Statistics & Valuation - Stock Analysis^[2] suggest that the market is pricing in a “wait-and-see” approach. TD Cowen's $98 target, while higher, may reflect a belief in TCBI's ability to outperform peers in a low-rate environment—provided it can sustain its cost discipline and fee-income growth.

Final Verdict: Undervaluation or Overcaution?

TD Cowen's “Hold” rating is neither a dismissal of TCBI's potential nor a ringing endorsement. It's a call to patience. The bank's strategic moves are sound, but the market is demanding proof that these initiatives will translate into superior returns. At $86.01, TCBI is trading at a premium to its peers on a P/B basisTexas Capital Bancshares (TCBI) Statistics & Valuation - Stock Analysis^[2], yet its forward P/E suggests skepticism about near-term earnings.

For investors, the key question is whether TCBI can bridge the gap between its ambitious strategy and its current financial metrics. If the bank can deliver consistent ROE growth and maintain its deposit momentum, the $98 target could be a steal. But in a sector where caution reigns, TD Cowen's “Hold” may simply be a prudent acknowledgment of the risks ahead.