FHN: Future Returns Will Reflect Buybacks Amid Mixed M&A Optionality

Analysts have modestly raised their intrinsic value estimate for First Horizon to approximately $25.25 per share from about $24.49, reflecting slightly stronger long term revenue growth assumptions and a higher future earnings multiple, even as near term price targets recalibrate lower amid fading M&A premium and limited upside catalysts.

Analyst Commentary

Bullish analysts acknowledge the volatility around management's M&A messaging but still view First Horizon as a strategically valuable franchise with upside potential relative to current trading levels. They generally see the recent selloff as creating a more attractive entry point, even as they trim price targets to reflect reduced near term M&A optionality.

Bearish analysts, by contrast, emphasize the lack of a clear near term sale catalyst and argue that the current valuation already discounts much of the realistic upside from organic growth, warranting more cautious positioning until strategic direction and execution are better clarified.

Bullish Takeaways

• Some bullish analysts argue the post earnings selloff has been overdone, contending that the lower share price now offers an appealing risk reward profile relative to their revised intrinsic value estimates.
• They highlight the bank's franchise quality and scarcity value within its geography, suggesting that these attributes could still support a premium valuation over regional peers if management executes on its growth and profitability goals.
• Several bulls continue to see First Horizon as a credible takeout candidate over the medium term, even if timelines have shifted. They believe this dynamic underpins a floor under the stock and preserves upside optionality.
• Positive views also center on operational execution, including reaffirmed medium term guidance, expected benefits from a lower rate environment, and a measured loan growth and expense outlook that could drive steady earnings expansion.

Bearish Takeaways

• Bearish analysts stress that a near term whole bank sale now appears unlikely. They see this as removing a key upside catalyst that had previously supported a higher valuation and M&A premium in the shares.
• They see management's openness to being a buyer in bank M&A as a potential overhang, arguing that inorganic expansion introduces integration and execution risk at a time when investors had been counting on a simpler sale narrative.
• Some cautious views hold that the current valuation is roughly fair on a fundamental basis, with limited room for multiple expansion absent clearer evidence of superior organic growth or capital deployment.
• There is also concern that investor sentiment has been negatively reset by the strategic messaging shift, potentially capping near term upside even if earnings delivery remains solid.

What's in the News

• The Board of Directors amended the company bylaws to expand the board size to fourteen members from thirteen, effective immediately, signaling incremental governance and oversight changes (company filing).
• The Board authorized a new share repurchase program allowing the company to buy back up to $1.2 billion of common stock, with the authorization running through January 31, 2027 (company announcement).
• Between October 1 and October 27, 2025, First Horizon repurchased about 6.1 million shares, or 1.22 percent of shares outstanding, bringing total buybacks under the existing plan to roughly 39.1 million shares, or 7.55 percent, for $820 million (company disclosure).
• The company reaffirmed its full year 2025 revenue guidance, maintaining an outlook for revenue to be flat to up 4 percent, which reflects management's stated confidence in the current operating trajectory (earnings guidance).
• Third quarter 2025 net charge offs rose modestly to $26 million from $24 million a year earlier, indicating a slight uptick in credit costs while remaining manageable in absolute terms based on current disclosures (earnings release).

Valuation Changes

• The Fair Value Estimate has risen slightly to approximately $25.25 per share from about $24.49, reflecting modestly stronger long term assumptions.
• The Discount Rate has increased slightly to around 7.12 percent from about 6.93 percent, implying a marginally higher required return and risk assessment.
• Revenue Growth has risen slightly, with the long term annual growth assumption moving to roughly 5.74 percent from about 5.55 percent.
• The Net Profit Margin has edged down marginally to about 27.46 percent from roughly 27.53 percent, indicating a very small compression in expected profitability.
• The Future P/E has increased modestly to approximately 12.4x from about 12.2x, signaling a slightly higher valuation multiple applied to forward earnings.