FHN - First Horizon upgraded to Overweight at Wells Fargo as sale to TD still likely

2023-03-24 09:13:38 ET

Wells Fargo analyst Jared Shaw on Friday upgraded First Horizon National ( NYSE: FHN ) to Overweight from Equal Weight as he still expects TD Bank to eventually complete its proposed acquisition of FHN at the original agreed-upon price of $25 per share.

Even if the banks aren't able to gain final regulatory approval before the renegotiated end date of May 27 for the transaction, "we don't think it will need a price renegotiation," Shaw wrote in a note to clients.

If TD Bank ( NYSE: TD ) tried to reduce the price, then First Horizon ( FHN ) have to go back to both its board and shareholders for new approvals. The process to complete the deal has dragged on for over a year, TD agreed in February 2022 to buy FHN for $13.4B.

"This would inject considerable uncertainty of outcome & delays that we believe would be unpalatable to TD, who indicate they are still excited for the deal," he said.

Also in its favor, First Horizon ( FHN ) is seeing stability in its deposits amid recent bank turmoil

If the bank were to remain independent, Shaw estimated its standalone valuation at $18. That compares with FHN's closing price of $15.78 on Thursday.

"We believe downside risk is limited to $15, while original deal completion provides 60% upside," he wrote.

The SA Quant rating for FHN is Hold, as is the Quant rating for TD.

Earlier this month, First Horizon ( FHN ) stock plunged amid the bank selloff with TD Bank deal uncertainty

For further details see: