Wunderlich Securities analyst Kevin Reynolds has lifted his price target for shares of Pinnacle Financial Partners to $48 from $40 but is keeping his 'hold' rating. The largest bank headquartered in Nashville (Ticker: PNFP) got a lift this week from the news that is plans to buy Chattanooga's CapitalMark Bank & Trust. In Friday morning trading, they're down slightly to $44.65.
Over at Bank of America Merrill Lynch, analysts have taken Louisiana-Pacific down a notch to 'neutral' from 'buy' and trimmed their price target to $17 from $18. Shares of downtown-based LP (Ticker: LPX) are off about 0.5 percent to $16 today and down about 3 percent year to date.
Look for Pinnacle Financial Partners' leaders to quickly deploy its treasury management and wealth management resources at CapitalMark Bank & Trust once they complete their acquisition of Chattanooga's fourth-largest bank this fall.
On a call with analysts and investors Wednesday morning, Turner and CFO Harold Carpenter outlined more details of their $187 million deal, which will lift the company's assets to more than $7 billion. (Check out Pinnacle's slide presentation here.) Among them is the opportunity ramp up fee income at eight-year-old CapitalMark, which last year pulled in noninterest income — the "NII" next to the red oval in the image below — at less than half the rate of Pinnacle, which also has a robust insurance business courtesy of its acquisitions last decade of two brokerages that now do business as Miller Loughry Beach.
Another growth path for the CapitalMark business is building out a Chattanooga-area branch network. Looking ahead to his long-term goal of building Pinnacle into a bank with up to $15 billion in assets, Turner said he could see The Scenic City being home to around five offices versus the two it has now in downtown Chattanooga and in nearby Cleveland. That, he said, would suppose that Pinnacle's asset base in southeast Tennessee will grow to between $2 billion and $2.5 billion.
On the call, Turner also spent a good bit of time answering questions about the potential timing of future deals, including one that would take it into Memphis to complete its Tennessee major-market puzzle. There's no change to report there, he said, pointing out that he has been clear over the years that his team's hunt is about finding just the right partner — à la CapitalMark — much more than it is about timing.
Investors seem to be OK with the relatively rich price — more than two times book value — that Pinnacle is paying for CapitalMark. At about 2:20 p.m., the company's stock (Ticker: PNFP) was up 2.2 percent to $45.59, just off the all-time high it reached earlier in the day.
Shares of HCA Holdings are on the list of 10 catalyst-driven picks for the second quarter at BofA Merrill Lynch. The firm's analysts say a favorable Supreme Court ruling in King vs. Burwell — which is expected by late June — will give the country's largest private hospital operator "plenty of upside possibility with little downside." HCA shares (Ticker: HCA) are up slightly so far this year.
Raymond James analysts have added AAC Holdings to their list of must-own health care stocks for the coming months. AAC (Ticker: AAC), which went public late last year, is down just a bit so far in 2015.
Our playbook for 2015 encompasses four key themes to invest behind: above-average growth (relative to peer groups), reform (which has been strong on the exchange front and could see a bump in Medicaid enrollment as more states expand Medicaid), capital deployment optionality, and free cash flow generation (the last two provide downside support and can act as incremental growth drivers).
And lastly for now, Sandler O'Neil analyst Stephen Scouten has lowered his rating on shares of Pinnacle Financial Partners (Ticker: PNFP) to 'hold' from 'buy' after they hit his $44 target. However, he has tweaked that target to $47.
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