Truist raises Popular stock price target on deposit costs, expenses

Truist raised Popular, Inc.'s price target to $172 from $164 and kept a Buy rating, citing deposit cost improvement, lower expenses, and potential capital optimization that could support higher shareholder returns. Popular also reported Q1 2026 EPS of $3.78, beating estimates by 14.2%, though revenue of $835.81 million missed forecasts by 1.63%. The stock trades at $149.27, near its 52-week high of $151.99, after a 59.5% gain over the past year.

Analysis

BPOP is transitioning from a “clean balance sheet” story to a capital allocation story, and that usually matters more for multiples than another quarter of modest operating beats. The likely catalyst is not earnings quality per se, but a re-rating if management explicitly converts excess CET1 into a higher payout framework; banks with this setup often see the stock move on capital action before the economics fully show up in reported ROE. The second-order effect is that preferred issuance, if used, can mechanically lift common equity returns while also signaling management confidence that credit does not require the current capital cushion.

What the market may be missing is that the upside case is capped if loan growth stays anemic. In regional banks, a “better margin / lower expense” quarter can get priced quickly, but without asset growth the multiple expansion tends to stall after the catalyst fades. That creates a setup where the stock can outperform into an announcement window, then consolidate unless there is evidence of accelerating C&I or consumer lending over the next 1-2 quarters.

The risk is that capital optimization is already partially reflected after a strong run and the stock trading near highs. If management disappoints on the size or timing of returns, the name can de-rate fast because investors are now explicitly anchoring to buybacks/dividends rather than fundamentals alone. Conversely, if the bank signals a more aggressive common return plan while keeping credit benign, this becomes a 6-12 month compounding story rather than a one-quarter trade.

Key Decisions for Investors

• Maintain a tactical long in BPOP into second-quarter guidance, with a 4-8 week horizon; target a move toward the mid-160s if capital optimization is confirmed, but trim strength if the announcement lacks specificity.
• Buy BPOP Jan-2026 call spreads to capture a post-announcement re-rating while defining downside; attractive if the market is underpricing a CET1-to-payout conversion, but cap gains if loan growth remains weak.
• Pair trade: long BPOP / short a regional bank with less excess capital and weaker return-on-equity visibility over the next 1-3 months; the spread should widen if BPOP announces a meaningful return framework.
• If BPOP rallies on the headline and then stalls, sell into strength and rotate into higher-growth bank names; without loan growth acceleration, the multiple expansion is likely to be event-driven rather than durable.