First Horizon Corp.’s (NYSE:FHN) standalone value after the collapse of its sale $13.4 billion sale to TD Bank (NYSE:TD) on Thursday is $11 to $13 a share, according to a Jefferies analyst.
Synovus Financial (SNV) and Hancock Whitney Corp. (HWC) are the best comparable banks for First Horizon (FHN) due to their geographic footprint, size, profitability profile and business mix, Jefferies analyst Casey Haire, who has a hold rating on FHC, wrote in a note on Thursday.
Both SNV and HWC trade at ~7x 2023 consensus EPS, which equates to a $13 share price for First Horizon (FHN), according to Haire. On a tangible book value basis, SNV and HWC both trade at ~1x stated tangible blook value, which equals $11 a share for FHN.
First Horizon (FHN) shares plunged 33% on Thursday after the bank and TD Bank (TD) agreed to mutually terminate the $25 a share purchase of FHN with uncertainty over obtaining regulatory approvals looming more than a year after the two companies agreed to the deal. The termination came as a shock to some M&A investors as there was an expectation that a deal price for FHN would be renegotiated lower, rather than the deal being ended.
“Despite the deal termination, our view of the company is unchanged, and we believe they can remain a consistent operator in attractive markets with steady credit quality and a focus on positive operating leverage,” RBC analyst Jon Arfstrom, who has a sector perform on First Horizon (FHN), wrote in a note on Thursday. “Our bottom line is that we believe the company can continue to operate profitably in the current environment as a standalone entity with no material obstacles.”
RBC’s Arfstrom cut his price target on First Horizon (FHN) to $12 from $25 as valuation is now based on ~7x 2023 EPS estimates.
“I’d like to be very clear. The fact that regulatory approvals weren’t able to be obtained by May 27 did not relate in any way to First Horizon,” Jordan said on the call.
More on First Horizon/TD Bank