Sterne Agee Has Buy On Pinnacle Financial Partners (PNFP)

Sterne Agee has a Buy rating and a $17.50 price target on shares of Pinnacle Financial Partners PNFP. In a note to investors, Sterne Agee writes, "PNFP posted EPS of $0.06 in 1Q11—solidly above our 1Q11E of $0.04 and consensus of $0.02—as credit quality and the margin continued to improve. The better than expected result reflected: (1) lower OREO expense (EPS: +$0.06), which was offset by (2) higher provision (EPS: -$0.03), and (3) lower net interest income (EPS: -$0.01). Credit quality reflected broad improvement as C&D loans (-9% LQ), NPLs (-6% LQ), TDRs (-25% LQ), criticized/classified loans (-9% LQ), and potential problem loans (-23% LQ) all decreased meaningfully in 1Q11. Importantly, the margin improved 15 bp Y/Y and 11 bp LQ to 3.40%, which was 5 bp more than we modeled. With a short interest of 3.6 million shares (~11% of PNFP), we would not be surprised to see PNFP's stock rally $0.50 given the progress in credit quality, the margin, and loan growth." Shares of PNFP lost 24 cents yesterday to close at $15.84, a loss of 1.5%.