A strong run for the stock since late June has the price bumping up against Hilliard Lyons' price target of $57. Given the choice of heading to the sidelines or sticking with a Buy rating, analyst Andrew Stapp reiterates a Buy and lifts the price target to $64.
That target represents a "conservative" multiple of 19x forward earnings and 290% of tangible book value.
"We believe Pinnacle's (PNFP -0.2%) NIM is less vulnerable to the flattening of the yield curve compared to peers given that its securities portfolio is undersized at 13.7% of assets."
In a merger of Nashville lenders, Pinnacle Financial Partners (PNFP -4%) is buying Avenue Financial (AVNU +39.7%) for roughly $200M in stock and cash.
Avenue owners will receive 0.36 shares of PNFP and $2 in cash for each share of AVNU they hold, and will own about 8.1% of the combined company.
Assuming the deal closes late in Q3, expect a modestly accretive 2016 impact to Pinnacle's EPS and a 4.2% addition to 2017 earnings. Tangible book value will be diluted by 1%. Once the technology conversion takes place, about 40% of Avenue's expense base will be eliminated.