1 Bank Stock Set to Rebound in 2026
Key Points
Pinnacle Financial Partners recently closed on its merger with Synovus.
With their respective geographical overlap, the combined banks anticipate wringing out high cost and growth synergies.
Pinnacle Financial shares have underperformed relative to other regional bank stocks, but the stock could make a massive recovery over the next two years.
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Over the past year, regional bank stocks have generally been trending higher. That hasn't been the case, however, for Tennessee-based Pinnacle Financial Partners (NYSE: PNFP). A key reason for Pinnacle's 20% decline has been the market's reaction to a now-completed merger with one of its competitors.
Namely, investors were concerned about how this deal would dilute Pinnacle's tangible book value, as well as execution risks related to this deal.
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However, following its steady slide, the stock's valuation arguably now accounts for this uncertainty. In the event that post-merger synergies are achieved, the resultant positive impact on earnings could drive a strong recovery for shares.
For Pinnacle Financial Partners, a new catalyst emerges
Last July, Pinnacle Financial Partners announced its plans to merge with Synovus Financial in an $8.6 billion all-stock merger. The transaction closed on Jan. 2. Synovus, headquartered in Columbus, Georgia, is similar to Pinnacle in that it is a regional bank with operations primarily in the southeastern United States.
Image source: Getty Images.
For now, Pinnacle and Synovus will continue operating under their respective brands, but in 2027, they will consolidate under the Pinnacle brand. With this geographic overlap, there is a great opportunity for the combined financial institution to achieve cost and growth synergies.
A path to past highs, then on to loftier price levels?
As noted in Pinnacle's fourth-quarter 2025 investor presentation, the bank expects to realize $250 million in annualized cost savings, plus up to $130 million in post-merger revenue synergies, over the next few years.
Pinnacle appears well-positioned to meet, or even beat, sell-side analyst earnings estimates. The current consensus calls for earnings per share (EPS) of $10.17 and $11.74 for 2026 and 2027, respectively. If achieved, potential upside could be substantial, especially if the stock experiences valuation expansion.
Currently valued at around 10 times forward earnings, even a rerating to a low-teens forward P/E would push the stock not just back to past highs of around $125 per share, but toward even loftier price levels.
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Thomas Niel has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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