Is Weaker Loan Profitability Reshaping the Investment Thesis for First Horizon (FHN)?

• In recent days, First Horizon has come under scrutiny as it reported revenue declines and a drop in net interest margin, reflecting reduced profitability in its loan portfolio during the current economic cycle.
• This signals growing caution among investors regarding the bank’s capacity to sustain earnings amid sector-wide pressures on credit quality and sales growth.
• We'll now explore how investor concerns over decreasing revenue and loan profitability may alter First Horizon's investment narrative.

Rare earth metals are an input to most high-tech devices, military and defence systems and electric vehicles. The global race is on to secure supply of these critical minerals. Beat the pack to uncover the 35 best rare earth metal stocks of the very few that mine this essential strategic resource.

First Horizon Investment Narrative Recap

Shareholders in First Horizon are typically betting on the bank’s ability to manage costs, maintain healthy net interest margins, and capture organic loan growth even as sector-wide headwinds pressure profitability. The recent news of declining revenue and lower net interest margin has increased attention on the risk that credit quality and earnings could weaken further, raising questions about near-term performance, even as the biggest catalyst remains the company’s ability to control expenses and drive stable returns. Right now, these updates are material for anyone watching the link between margin trends and earnings risk.

The company’s previously announced share repurchase activity, over 24 million shares bought back since late 2024, stands out as highly relevant to the current situation, as buybacks can help support earnings per share in the face of slowing sales. However, this program’s effectiveness is likely to be watched closely if pressure on revenue and loan margins persists, keeping attention firmly on how First Horizon manages capital as profit growth becomes less certain.

In contrast to the sometimes-overlooked risks, investors should be aware that deteriorating net charge-offs could...

Read the full narrative on First Horizon (it's free!)

First Horizon's narrative projects $3.7 billion revenue and $965.0 million earnings by 2028. This requires 6.7% yearly revenue growth and a $149.0 million earnings increase from the current $816.0 million.

Uncover how First Horizon's forecasts yield a $24.77 fair value, a 8% upside to its current price.

Exploring Other Perspectives

Fair value estimates for First Horizon from three Simply Wall St Community members range from US$24.77 to US$36.55 per share. While analysts point to growing concerns over declining loan profitability, these varied opinions suggest there is wide disagreement about the bank’s future, so you have multiple viewpoints to consider.

Explore 3 other fair value estimates on First Horizon - why the stock might be worth just $24.77!

Build Your Own First Horizon Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your First Horizon research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.
• Our free First Horizon research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate First Horizon's overall financial health at a glance.

No Opportunity In First Horizon?

Markets shift fast. These stocks won't stay hidden for long. Get the list while it matters:

• Trump's oil boom is here - pipelines are primed to profit. Discover the 22 US stocks riding the wave.
• The end of cancer? These 28 emerging AI stocks are developing tech that will allow early identification of life changing diseases like cancer and Alzheimer's.
• Find companies with promising cash flow potential yet trading below their fair value.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com