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Fifth Third Bancorp (FITB), headquartered in Cincinnati, Ohio, is a bank holding company for Fifth Third Bank, National Association that provides a range of financial products and services. Valued at $27.13 billion by market cap, the company’s principal businesses include retail banking, commercial banking, investment advisory, and data processing. The regional bank had 1,070 U.S. branches.
Shares of the diversified financial services company have outperformed the broader market considerably over the past year. FITB has gained 44.5% over this time frame, while the S&P 500 Index ($SPX) has risen 18.9%. In 2024, FITB stock is up 15.2%, compared to SPX’s 11.3% returns on a YTD basis.
Narrowing the focus, FITB’s outperformance is apparent compared to the S&P 500 Financials Sector SPDR (XLF). The exchange-traded fund has gained about 21.1% over the past year. Moreover, FITB’s gains on a YTD basis compare to the ETF’s 12.2% returns over the same time frame.
FITB’s overall performance can be attributed to its strong financial performance, especially in an environment where other regional banks are boosting their provisions for credit losses due to the potential of default on commercial real estate loans. The bank has generated improved net interest income and margin through its diversified revenue streams, well-managed liquidity, and peer-leading expense discipline. Moreover, the bank has solid plans for expansion, targeting to open 35 to 45 branches annually through 2028.
On Jul. 19, FITB shares closed up more than 1% after the company reported its Q2 results. Its net interest income declined 4.8% year over year to $1.39 billion, and its adjusted EPS came in at $0.86, beating the consensus estimates of $0.84. The company’s return on average assets stood at 1.14%, compared to 1.17% in the year-ago quarter. Moreover, its CET1 ratio was 10.60%, compared to 9.49% in the prior-year quarter. FITB repurchased common shares worth $125 million during the quarter.
The bank expects its 2024 total revenue to fall approximately 2% from 2023, compared with its previous guidance of a decline of 1% to 2%. Moreover, its net interest income is expected to fall between 2% and 4% year over year. It expects Q3 total revenue to rise between 1% and 2% and net interest income to increase approximately 2%.
For the current fiscal year, ending in December, analysts expect FITB to report an EPS decline of 7% to $3.30 on a diluted basis. The company’s earnings surprise history is impressive. It beat the consensus estimate in each of the last four quarters.
Among the 23 analysts covering FITB stock, the consensus rating is a “Moderate Buy.” That’s based on 12 “Strong Buy” ratings, one “Moderate Buy,” and 10 “Holds.”
This configuration is more bullish than three months ago, with 11 suggesting a “Strong Buy.”
Recently, Morgan Stanley analyst Manan Gosalia maintained a “Hold” rating on FITB stock and raised its price target from $36 to $47, implying a potential upside of 18.5% from current levels.
The mean price target of $43.81 represents a 10.5% premium to FITB’s current price levels. The Street-high price target of $50 suggests an ambitious upside potential of 26.1%.
On the date of publication, Neha Panjwani did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
