Compass Point: 'PNC is One of Our Favorite Large Cap Regional Banks to Own'

Analyst Kevin Barker at Compass Point on Thursday, April 17, 2014, released a report on PNC Financial Services (NYSE: PNC). Shares of the company are down $0.97 or 1.15 percent to $83.41 per share.

Kevin Barker reiterated the firm's rating on PNC at Buy. Additionally, the firm is raising its price target to $97 from $94, following the release of its first quarter earnings release.

The firm said that PNC reporting another strong quarter demonstrated the strength of its business model and the significant capacity it has to cut its expenses. Analysts at Compass Point also believe that there remains significant room for the company to cut expenses and improve the efficiency of its overall business.

The firm continued stating that the continued decline in PNC's expenses, combined with the deployment of capital via share buybacks, will put PNC in an excellent position to increase operating leverage and grow its earnings per share over the long-term.

The firm commented, “PNC is one of our favorite large cap regional banks to own, especially in a lackluster economic environment. We maintain our FY14E operating EPS remains at $7.06 and we are adjusting our FY15E EPS to $7.50 from $7.55 due to slightly lower fee income.”

PNC beat not only the consensus estimate of $1.67 but its estimate of $1.68 as well. PNC had its operating earnings per share come in at $1.72 per share. The firm also cited Mortgage banking, loan growth, and positive trends in credit quality, as highlights.

Compass Point has cited the following as potential risks:

• Capital
• Geography
• Interest Rate Risk. If interest rates jump drastically, PNC may be unprepared.
• Regulatory. Potential that a regulation could negatively impact PNC's profitability.
• The company may not achieve its operating expense savings rates.