PNC Financial Services Group, Inc. It is an American banking holding company and financial services company headquartered in Pittsburgh, Pennsylvania with a market capitalization of $49.2 billion. The company is scheduled to report its earnings report for the first quarter of 2023 on Friday (April 14) before the market opens.
PNC Financial Services Group, Inc. in providing financial services. It operates through retail banking, corporate and institutional banking, asset management group and other segments. The Retail Banking segment provides deposit, lending, brokerage, investment management and cash management products and services to consumer and small business customers.
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PNC Financial Services Group last released its earnings data for the fourth quarter of 2022, on January 18, 2023. The financial services provider reported earnings of $3.49 per share for the quarter, which is below the consensus estimate of $3.95. The company achieved revenues of $5.76 billion for the previous quarter, compared to analysts’ expectations of $5.71 billion. Its revenue increased by 12.4% compared to the same quarter last year. PNC Financial Services Group had earnings of $13.87 per share over the past year ($13.87 diluted earnings per share) and currently has a price-to-earnings ratio of 8.8. PNC Financial Services Group’s earnings are expected to grow 1.18% next year, from $14.35 to $14.52 per share.
The Company considers that it has not done enough to gain investor and market confidence during the quarter to be published. As such, Zacks’ first-quarter 2023 earnings consensus estimate of $3.61 decreased slightly compared to the previous week, reflecting a pessimistic attitude. Moreover, the figure indicates a growth of 9.7% over the figure recorded last year. The scale estimate is now $3.64. With that said, forecasts of $5.62 billion in revenue point to an increase of 19.7% over the prior year. According to management, the top line will be down 3 percent sequentially. The scale is estimated at $5.63 billion.
The collapse of the Silicon Valley bank and mounting recession fears led to a slower pace of loan growth during the first quarter compared to the previous quarter, due to the uncertain economic environment. According to the Fed’s latest data, demand for commercial and industrial loans fell during the quarter, while commercial real estate loans, credit card loans, and other consumer loans rose. This is expected to have a positive impact on the average earnings of profitable companies.
However, the recent massive hike in interest rates is likely to limit any further positive impact on the company’s non-interest revenue, which is expected to decline by 1% to 2% sequentially. Moreover, the consensus forecast for the National Insurance Index (FTE) pegged at $3.66 billion, implying a sequential decline of 1.5 percent. The company expects average loans to increase by 1-2% compared to the previous quarter. Interest-earning assets are expected to average $506.5 billion for the quarter, which is an uptick. The value of the scale is estimated at $506.3 billion. In addition, higher interest rates and higher inflation are expected to increase transaction volume and spending, thus supporting PNC card fees in the first quarter of 2023. At the same time, the company’s revenues related to capital markets are likely to be negatively affected as long as it continues global economic uncertainty.
Overall, the Zacks estimate for non-interest income pegged at $2 billion, indicating a decline of 4%. Management expects fee income to decline by 3-5%. As for the stock price, Zacks gives it a #3 rating (commentary) Source: zacks
Technical Analysis
The share value of #PNCFinancial Service in the first quarter of 2023 experienced a sharp decline of more than -20% and closed at 127.32 at the end of March 2023. At the beginning of April, the price of #PNC still looks weak, despite its tendency to fluctuations. Range above the round number 120.00. March low, which was printed at 119.26, is considered temporary minor support for now. A move below this level could extend the correctional wave from the top of 228.09 to the 78.6% retracement level (110.02).
A move above the 132.48 resistance would confirm the short-term rebound to the 143.05 handle first, before moving further to the upside. The RSI is at an oversold level, MACD is in oversold territory and the bearish bias remains strong with price action below the 20-day moving average (red line). However, the bearish momentum is starting to hold, and although the price action is still in the lower band, the BB looks increasingly conical which indicates a pause in the decline and this consolidation will occur, before the real trend is formed.
Based on 15 Wall Street analysts who provided 12-month price targets for PNC Financial in the past three months, the average price target is $163.11 with a high estimate of $218.00 and a low estimate of $125.00. The average price target represents a change of 32.78% from the last price of $122.84.
JPMorgan Chase & Co. cut its price target for PNC from $175.00 to $151.50 in a research note issued to investors Monday, The Fly reported. JPMorgan Chase & Co’s price target indicates a potential upside of 24.30% from the company’s current price. Source: msn.
A number of other equity analysts also influenced the company. UBS Group downgraded PNC from a “buy” rating to a “neutral” rating and lowered its price target for the stock from $190.00 to $176.00. Deutsche Bank Aktiengesellschaft raised PNC shares from a “hold” rating to a “buy” rating and lowered its price target from $200.00 to $190.00. Bank of America raised its price target for the stock from $157.00 to $160.00. Morgan Stanley cut its price target on PNC from $163.00 to $137.00 and assigned an “underweight” rating to the stock in a research note on Wednesday, April 5th. Meanwhile, according to MarketBeat, the company has a consensus rating of “Hold” and an average price target of $174.13.
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Eddie Fangisto
Market Analyst – HF Education Office – Indonesia
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