First Horizon Bank
FHN
$22.88
+0.09%
First Horizon Corporation is the Memphis-based parent of First Horizon Bank, a regional banking franchise with roughly 200 branches concentrated across Tennessee and the broader southern United States, operating through Commercial, Consumer & Wealth, Wholesale, and Corporate segments, with the Commercial and Consumer & Wealth businesses generating the bulk of revenue through traditional lending and deposit-taking. It is a mid-cap regional bank (approximately $11 billion market capitalization, 7,400 employees) whose identity is rooted in relationship-based commercial lending and a geographic footprint in faster-growing Sun Belt markets rather than in capital-markets or fee-heavy businesses. The current investor debate centers on net interest margin trajectory and deposit costs as the rate cycle evolves, alongside credit quality in commercial real estate and the durability of the bank's capital return program — buybacks have been a consistent feature of recent quarters. With the stock lagging the broader market meaningfully over the past year despite steady earnings, the narrative has shifted toward whether FHN is a cheap, well-capitalized value play or a structurally low-return franchise deserving of its discount.…
FHN
First Horizon Bank
$22.88
Investment Opinion: Should I buy FHN Today?
Rating: Hold with a bias toward accumulating on weakness. The core thesis is that FHN is a well-capitalized, cash-generative regional bank trading at a forward PE of 9.83x with an 18.2% upside to the $27.04 average analyst target, but near-term momentum and revenue stagnation argue for patience. The consensus recommendation is Buy (mean 2.45), and every published target is above the current price, anchoring the view that the sell-off has overshot.
Supporting evidence: (1) Valuation—forward PE of 9.83x versus trailing 12.65x, with a PEG of 0.333, is cheap relative to the 11.11% ROE and 2.90% dividend yield. (2) Profitability—net margin expanded to 21.85% from 19.92% YoY, and gross margin rose to 70.24% from 64.21%. (3) Cash flow—trailing FCF of $1.385 billion implies an 11.8% FCF yield, funding $356 million of buybacks in the first half of 2026. (4) Analyst targets—the average of $27.04 implies 18.2% upside, and even the low target of $25.00 is 9.3% above the current price. Against the regional-bank peer group, the 12.65x trailing PE is in line to modestly above the typical 10–12x range, but the forward multiple is at a discount.
Risks and conditions: The biggest risks are a renewed leg down in net interest margin, a commercial real estate credit shock, and continued relative underperformance that forces analyst estimate cuts. This Hold would upgrade to Buy if the stock reclaims the $24.50–$25.00 resistance area with margin stabilization evidence, or if the forward PE remains below 10x while revenue growth turns positive sequentially. It would downgrade to Sell if revenue declines below $1.20 billion for two consecutive quarters or if the price breaks below the $22.50–$23.00 support zone, opening the path to $20.00. Valuation verdict: fairly valued to modestly undervalued on forward earnings, but not a deep bargain on book value given the 1.33x price-to-book near the top of its historical range.
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FHN 12-Month Price Forecast
FHN presents a balanced risk/reward: the forward PE of 9.83x and 11.8% FCF yield are cheap, and the unanimous analyst target floor of $25.00 suggests the sell-off has overshot. However, revenue has plateaued sequentially, and the stock has underperformed the S&P 500 in every window, with a YTD relative strength of -17.11. The neutral stance reflects this tension—valuation supports the stock, but momentum and margin uncertainty cap near-term upside. I would upgrade to bullish if Q3 2026 earnings show sequential revenue growth and net interest margin stabilization, and downgrade to bearish if revenue falls below $1.20 billion or the stock breaks below $22.50.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on First Horizon Bank's 12-month outlook, with a consensus price target around $27.04 and implied upside of +18.2% versus the current price.
Average Target
$27.04
0 analysts
Implied Upside
+18.2%
vs. current price
Analyst Count
—
covering this stock
Price Range
$25 - $31
Analyst target range
Coverage is robust with 21 analysts, and the consensus recommendation is Buy with a mean rating of 2.45 on a scale where lower is more bullish. The average target price of $27.04 implies roughly +18.2% upside from the current $22.88, and notably even the lowest target of $25.00 sits about 9.3% above the current price — meaning every published analyst target is above the market, a uniformly bullish signal that is unusual and suggests the sell-off has overshot fundamental expectations. The consensus leans clearly bullish, with the average target implying the stock should trade near the upper half of its 52-week range.
The target range of $25.00 to $31.00 is moderately wide (24% spread from low to high), signaling meaningful disagreement about the pace of margin recovery and capital return. The high target of $31.00 — about 35.5% above the current price — would require multiple expansion toward 1.6x book and successful EPS delivery near the $2.57 consensus, likely contingent on net interest margin stabilization and continued buybacks; the low target of $25.00 prices in modest re-rating with little earnings growth. Institutional ratings show a stable-to-cautious tilt: Citigroup reiterated Buy in September 2026, Raymond James maintained Outperform, while JPMorgan, Wells Fargo, Truist, Evercore, and DA Davidson all carry Neutral/Hold/In Line ratings — a split that explains the wide target spread and suggests the bull case depends on catalysts (rate cuts easing deposit costs, credit remaining benign) that the hold-rated cohort is not yet willing to underwrite. The absence of any Sell ratings, combined with the 18% implied upside, frames FHN as a consensus long with timing risk rather than a broken thesis.
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Bulls vs Bears: FHN Investment Factors
The bear case currently has stronger near-term evidence: FHN has underperformed the S&P 500 in every time window, with a YTD relative strength of -17.11, and revenue has plateaued sequentially at $1.24 billion. However, the bull case rests on a forward PE of 9.83x, an 11.8% FCF yield, and a unanimous analyst target floor of $25.00 (9.3% above the current price), suggesting the sell-off may be overdone. The single most important tension is whether net interest margin stabilizes as deposit costs ease; if it does, the forward multiple is cheap and the stock re-rates toward the $27.04 average target, but if margin pressure forces EPS estimate cuts, the trailing 12.65x PE is the more honest anchor and the stock could drift toward the $20 low.
Bullish
- Forward PE below 10x: FHN trades at a forward PE of 9.83x versus a trailing PE of 12.65x, implying the market expects EPS to grow to the $2.57 consensus. A sub-10x multiple for a profitable regional bank with an 11.11% ROE and 2.90% dividend yield is a meaningful valuation cushion.
- Every analyst target above price: The lowest of 21 analyst targets is $25.00, already 9.3% above the current $22.88, while the average target of $27.04 implies 18.2% upside. The absence of any sell rating and a consensus Buy (mean 2.45) suggests the sell-off has overshot fundamental expectations.
- Margins expanding despite flat revenue: Q2 2026 net margin rose to 21.85% from 19.92% a year earlier, and gross margin expanded to 70.24% from 64.21%, even as revenue grew only 2.48% YoY. Expense discipline and a lower share count (475 million vs. 508 million) are driving EPS growth of 22% ($0.55 vs. $0.46).
- 11.8% free-cash-flow yield: Trailing free cash flow of $1.385 billion against an $11.7 billion market cap produces an FCF yield of roughly 11.8%, exceptionally high for a bank. This cash generation funds a well-covered 2.90% dividend (34.6% payout) and aggressive buybacks ($121 million in Q2 2026, $235 million in Q1 2026).
Bearish
- Persistent relative underperformance: FHN has lagged the S&P 500 in every window: -4.39% vs. +1.22% over 1 month, -11.32% vs. +2.69% over 3 months, -5.80% vs. +7.48% over 6 months, and -5.18% vs. +11.93% YTD. The relative strength of -17.11 YTD is the weakest reading in the dataset, signaling sustained institutional de-risking.
- Revenue plateaued sequentially: Q2 2026 revenue of $1.24 billion declined from $1.263 billion in Q4 2025 and $1.268 billion in Q3 2025, despite 2.48% YoY growth off a weak base. The top line has stalled as net interest income is squeezed by deposit costs catching up to asset yields.
- Price-to-book near historical top: At 1.33x book, FHN sits near the top of its recent 0.88x–1.59x range even as the stock price has fallen, because book value per share has grown through retained earnings and buybacks. This limits the margin of safety on book value, unlike the 0.92x seen in late 2024.
- Analyst split reveals uncertainty: While the consensus is Buy, JPMorgan, Wells Fargo, Truist, Evercore, and DA Davidson all carry Neutral/Hold ratings, and the target range of $25–$31 is a wide 24% spread. The hold-rated cohort is not yet willing to underwrite margin recovery and benign credit.
FHN Technical Analysis
FHN is in a corrective downtrend within a longer-term recovery, having fallen to $22.88 from a 52-week high of $26.56 while remaining well above the 52-week low of $20.00 — the stock is trading at roughly 43.8% of its 52-week range, placing it in the lower-middle portion of the band rather than at either extreme. The 1-year change of +14.74% still shows a positive annual return, but the entire gain was front-loaded; the stock has given back ground consistently since mid-summer. This positioning suggests momentum has broken down rather than the stock being a deep-value falling knife, though the drift lower is persistent enough to warrant caution on catching the turn prematurely.
Short-term momentum is clearly negative and deteriorating: the 1-month change of -4.39% and 3-month change of -11.32% both lag the S&P 500's +1.22% and +2.69% over the same windows, producing relative strength readings of -5.61 and -14.01 respectively. The 6-month change of -5.80% versus SPY's +7.48% (relative strength -13.28) confirms a sustained period of underperformance rather than a brief dip, and the YTD decline of -5.18% against SPY's +11.93% (relative strength -17.11) is the weakest reading in the dataset. Notably, the 1-year figure remains positive even as every shorter window is negative, a classic divergence signaling that the trend has reversed from up to down over the past two quarters. Volume of roughly 8.4 million shares and a short ratio of 2.74 indicate no aggressive bearish positioning, so the selling looks more like steady institutional de-risking than a crowded short.
Key technical levels are well defined: support sits at the $20.00 52-week low, roughly 12.6% below the current $22.88, while resistance is the $26.56 52-week high, about 16.1% above. A decisive break below $22.50–$23.00 (the recent October consolidation zone) would open the path toward the $20 handle and likely trigger momentum-based selling, whereas reclaiming the $24.50–$25.00 area would be the first sign of a base forming. The beta of 0.627 is a critical risk-management input — FHN is roughly 37% less volatile than the market, meaning drawdowns and rallies alike tend to be muted, which argues for wider position sizing tolerance but also caps the upside torque in any bank-sector rally. The maximum drawdown of -17.16% over the period is consistent with a low-beta financial trading in a defined range rather than a high-volatility name.
Beta
0.63
0.63x market volatility
Max Drawdown
-17.2%
Largest decline past year
52-Week Range
$20-$27
Price range past year
Annual Return
+14.7%
Cumulative gain past year
| Period | FHN Return | S&P 500 |
|---|---|---|
| 1m | -4.4% | +0.2% |
| 3m | -11.3% | +2.9% |
| 6m | -5.8% | +8.4% |
| 1y | +14.7% | +14.9% |
| ytd | -5.2% | +11.9% |
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FHN Fundamental Analysis
Revenue is growing modestly but the trajectory is uneven: Q2 2026 revenue of $1.24 billion rose 2.48% year-over-year from $1.21 billion in Q2 2025, yet it declined sequentially from $1.263 billion in Q4 2025 and $1.268 billion in Q3 2025, indicating the top line has plateaued after a period of expansion. The year-over-year comparison is flattered by a weak Q2 2025 base, and the sequential softness reflects the classic regional-bank squeeze of compressed net interest income as deposit costs catch up to asset yields. EPS tells a more encouraging story, rising from $0.46 in Q2 2025 to $0.55 in Q2 2026, with diluted EPS of $0.54 versus $0.45 a year earlier, showing that expense discipline and share count reduction are doing more work than revenue growth. The investment case therefore hinges less on top-line acceleration and more on whether margin stabilization can convert into operating leverage.
Profitability is solid and improving: Q2 2026 net income of $271 million produced a net margin of 21.85%, up from 19.92% in Q2 2025, while gross margin expanded to 70.24% from 64.21% over the same period. The operating margin of 25.70% and EBITDA of $341 million (27.5% EBITDA margin) compare favorably with the prior-year quarter's $328 million and 27.1%, and the net income ratio of 21.85% is a healthy level for a regional bank. The trend across the last five quarters is one of steady margin expansion — net margin has climbed from 18.60% in Q1 2025 through 20.67%, 20.66%, 30.51%, and 21.85% — with the Q1 2026 spike reflecting a favorable interest-income mix and lower provisioning rather than a sustainable step-change. ROE of 11.11% is respectable but not exceptional for the sector, and the 1.29% ROA reflects the inherently thin spreads of a balance-sheet-driven lender.
Balance-sheet and cash-flow metrics are the strongest part of the story: debt-to-equity of 0.517 is conservative for a bank, the current ratio of 0.96 is typical of a deposit-funded institution, and trailing free cash flow of $1.385 billion against a $11.7 billion market cap implies a free-cash-flow yield of roughly 11.8% — exceptionally high and a key support for the valuation. Quarterly operating cash flow has been volatile ($585 million in Q2 2026, $278 million in Q1 2026, $738 million in Q4 2025, and -$200 million in Q3 2025), which is normal for a bank given working-capital swings in trading and investment portfolios, but the TTM figure confirms genuine cash generation. The dividend yield of 2.90% with a payout ratio of 34.6% is well covered, and buybacks of $121 million in Q2 2026 and $235 million in Q1 2026 show management is returning capital aggressively. The main financial risk is interest-rate sensitivity embedded in the securities book rather than leverage or liquidity.
Quarterly Revenue
$1.2B
2026-06
Revenue YoY Growth
+2.5%
YoY Comparison
Gross Margin
70.2%
Latest Quarter
Free Cash Flow
$1.4B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is FHN Overvalued?
Because FHN is profitable — Q2 2026 net income of $271 million and trailing EPS of $0.0838 on a per-share basis that reflects the reported diluted figure — the PE ratio is the appropriate primary metric, and the trailing PE of 12.65x versus a forward PE of 9.83x is the single most important valuation signal in the dataset. The 22% compression between trailing and forward multiples implies the market expects meaningful EPS growth, consistent with the consensus estimate of $2.57 for the forward period versus the current run-rate, and a PEG ratio of 0.333 suggests the stock is cheap relative to that expected growth. The forward multiple below 10x is low in absolute terms for any profitable financial, let alone one with an 11.11% ROE.
Against the regional-bank peer group, FHN's 12.65x trailing PE and 1.33x price-to-book are in line to modestly above the typical regional-bank range of roughly 10–12x earnings and 1.0–1.3x book, so the stock is not a deep discount on book value but is cheap on earnings power. The price-to-sales ratio of 2.35x and EV/EBITDA of 11.41x are reasonable for a bank with a 19.72% net margin and 25.70% operating margin, and the 2.90% dividend yield sits at the higher end of the peer distribution, providing a valuation floor. The premium to book is justified by the above-peer 11.11% ROE and the Sun Belt footprint, but the earnings multiple discount reflects the market's skepticism about margin durability and loan growth.
Historically, FHN's PE has ranged from roughly 9.7x to 16.8x over the past several years, and the current 12.65x sits near the middle of that band — not stretched, but not the bargain it was in late 2024 when the PE touched 9.7x and price-to-book fell to 0.92x. The price-to-book of 1.33x is near the top of its own recent range (0.88x to 1.59x), which is the one caution flag: book value is being valued more richly than at any point since 2022 even as the stock price has fallen, because book value per share has grown through retained earnings and buybacks. The forward PE of 9.83x, however, is near the low end of the historical band, suggesting the market is pricing in optimistic EPS delivery — if consensus is met, the stock is cheap; if margin pressure forces estimate cuts, the trailing multiple is the more honest anchor.
PE
12.6x
Latest Quarter
vs. Historical
High-End
5-Year PE Range 10x~13x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
11.4x
Enterprise Value Multiple
Investment Risk Disclosure
Financial and operational risks center on the bank's interest-rate sensitivity and revenue concentration. Revenue has plateaued sequentially at $1.24 billion in Q2 2026 versus $1.268 billion in Q3 2025, and the 2.48% YoY growth is flattered by a weak Q2 2025 base. The main vulnerability is the securities book, where mark-to-market losses could pressure book value if rates rise further; debt-to-equity of 0.517 is conservative, but the current ratio of 0.96 reflects the thin spreads of a deposit-funded lender. Quarterly operating cash flow has been volatile ($585 million in Q2 2026, $278 million in Q1 2026, -$200 million in Q3 2025), which is normal for a bank but complicates forecasting. Credit quality in commercial real estate remains a key operational risk, and any deterioration would force higher provisioning and erode the 21.85% net margin.
Market and competitive risks include valuation compression and sector rotation. At 1.33x price-to-book, FHN is near the top of its recent 0.88x–1.59x range, leaving little margin of safety on book value even as the stock price has fallen. The beta of 0.627 means FHN is roughly 37% less volatile than the market, which mutes drawdowns but also caps upside in a bank rally. Competitive pressure from larger national banks and fintech lenders could limit loan growth and fee income in the Sun Belt footprint. Recent news is absent, but the analyst split—with JPMorgan, Wells Fargo, Truist, Evercore, and DA Davidson all at Neutral/Hold—highlights disagreement about the pace of margin recovery, and any downgrade could trigger further relative underperformance.
Worst-case scenario: a recession-driven spike in credit losses combined with renewed deposit-cost pressure would compress net interest margin, force EPS estimate cuts below the $2.46 low consensus, and push the stock toward its 52-week low of $20.00. From the current $22.88, that represents a decline of approximately 12.6%. A more severe outcome, such as a commercial real estate shock that impairs capital and forces a dividend cut, could push the stock below the 52-week low toward the 0.92x book value seen in late 2024, implying a downside of roughly 30% to the $16–$17 range. The maximum drawdown of -17.16% over the period provides a historical reference for a typical adverse scenario, but a credit cycle would likely exceed that.
FAQ
The key risks, ranked by severity: (1) Interest-rate and margin risk—the securities book is sensitive to rate moves, and revenue has plateaued at $1.24 billion as deposit costs catch up to asset yields; a renewed margin squeeze would force EPS estimate cuts below the $2.46 low consensus. (2) Credit risk—commercial real estate exposure could force higher provisioning and erode the 21.85% net margin, particularly in a recession. (3) Valuation compression—at 1.33x book, near the top of its historical range, there is limited margin of safety on book value. (4) Momentum and relative underperformance—FHN has lagged the S&P 500 in every window, with a YTD relative strength of -17.11, and a break below $22.50 support could trigger momentum-based selling toward $20.00. The low beta of 0.627 mutes but does not eliminate these risks.
The 12-month forecast has three scenarios: a base case (50% probability) of $24–$27, assuming modest EPS growth toward $2.57 and revenue stabilizing around $1.24–$1.26 billion per quarter; a bull case (25% probability) of $27–$31, requiring net interest margin stabilization, benign credit, and multiple expansion toward 1.6x book; and a bear case (25% probability) of $20–$24, involving credit losses, margin compression, and a retest of the 52-week low. The base case is most likely, anchored by the forward PE of 9.83x and the analyst average target of $27.04. The key assumption is that net interest margin stabilizes as deposit costs ease; if it does not, the bear case gains probability.
FHN is fairly valued to modestly undervalued on forward earnings but not a deep bargain on book value. The forward PE of 9.83x is near the low end of its historical 9.7x–16.8x range, implying the market expects EPS to grow to the $2.57 consensus. The trailing PE of 12.65x is in line to modestly above the typical regional-bank range of 10–12x, while the price-to-book of 1.33x is near the top of its recent 0.88x–1.59x range. The PEG of 0.333 suggests the stock is cheap relative to expected growth, and the 2.90% dividend yield sits at the higher end of peers. The market appears to be pricing in modest EPS delivery with skepticism about margin durability; if consensus is met, the stock is undervalued, but if estimates are cut, the trailing multiple is the more honest anchor.
From a risk/reward perspective, FHN is a reasonable buy for value and income investors, but timing is uncertain. The stock trades at a forward PE of 9.83x with an 18.2% upside to the $27.04 average analyst target, and every published target ($25.00–$31.00) is above the current $22.88. The 2.90% dividend yield and 11.8% FCF yield provide a valuation floor, while the beta of 0.627 limits downside volatility. However, the stock has underperformed the S&P 500 in every window (YTD -5.18% vs. +11.93%), and revenue has plateaued sequentially. The biggest downside risk is a retest of the $20.00 52-week low, a 12.6% decline. It is a good buy for patient investors with a 12–18 month horizon who can tolerate near-term underperformance, but momentum traders should wait for a reclaim of $24.50–$25.00 before entering.
FHN is better suited for medium- to long-term investment than short-term trading. The beta of 0.627 means the stock is roughly 37% less volatile than the market, muting both rallies and drawdowns, which limits short-term trading upside. The 2.90% dividend yield with a 34.6% payout ratio and consistent buybacks ($356 million in the first half of 2026) reward patient holders. However, earnings visibility is moderate—revenue has plateaued and margin trajectory is uncertain—so a minimum holding period of 12–18 months is suggested to allow for a full rate cycle and potential re-rating toward the $27.04 average target. Short-term traders should watch the $22.50–$23.00 support and $24.50–$25.00 resistance levels for entry and exit points.
