TFC - Truist Financial: Improving Setup (Rating Upgrade)

2024-04-18 11:36:11 ET

Summary

• Truist Financial may benefit from a higher for longer rate environment due to persistent inflation headwinds.
• The sale of Truist Insurance Holdings could lead to higher capital returns for the bank's shareholders.
• Truist Financial's shares also trade at a discount to book value again, translating into an attractive risk profile.

Shares of Truist Financial ( TFC ) have seen a sharp upward revaluation starting in the fourth-quarter 2023 after the Federal Reserve said that it was planning to lower the federal fund rate in FY 2024. However, inflation headwinds seem to be persistent, potentially derailing the Federal Reserve’s plan to cut the federal fund rate up to three times this year. Truist Financial also recently agreed to sell the remainder of its insurance operations, which is set to lead to a large cash infusion as well as earnings accretion. As a result, Truist Financial has the potential to return more cash to shareholders in FY 2024. With shares again trading at a discount to book value, I believe the risk-and-reward setup has improved!...

For further details see: