Truist raises Popular stock price target on deposit costs, expenses By Investing.com

Truist raised Popular, Inc.'s price target to $172 from $164 and kept a Buy rating, citing deposit cost improvement, operating leverage from lower expenses, and the possibility of capital optimization. Popular’s Q1 2026 results showed EPS of $3.78, a 14.2% beat, though revenue of $835.81 million missed estimates 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

The cleaner read here is not just that the bank printed well, but that management appears to have reached a capital-intensity inflection point. If they can migrate excess common equity into a more efficient capital structure, the market should re-rate BPOP less like a slow-growth regional and more like a capital-return compounder; that matters because a 1-2 point improvement in common equity efficiency can have an outsized effect on ROTCE when the balance sheet is already overcapitalized. The big second-order effect is signaling: once one high-CET1 regional starts actively optimizing, peers with similarly fat capital buffers face pressure to follow or risk looking idle.

What looks underappreciated is that slower loan growth may actually be the right setup for the next leg of multiple expansion. In the near term, muted asset growth can compress headline optimism, but it also reduces credit migration risk and frees management to lean into payout actions without the market worrying about balance-sheet strain. That combination tends to support valuation in the months after earnings, especially when the stock is already near highs and the crowd is focused on whether growth, not capital, becomes the constraint.

The main risk is that the market has already priced in a lot of the capital-return story before any announcement is made. If management kicks the can to the second-half or frames optimization as modest, the stock could de-rate quickly because expectations have shifted from "possible" to "imminent." A less obvious tail risk is that extending more capital returns without reaccelerating loan growth could invite activist-style questions about long-term franchise investment versus financial engineering.

The contrarian takeaway is that this may be better as a relative-value trade than an outright chase. The setup favors institutions that can convert excess capital into buybacks/dividends efficiently, but it is vulnerable if the next quarter reveals that earnings quality was more one-off than durable. In other words, the upside is real, but the multiple is already telling you that the market wants execution, not promises.

Key Decisions for Investors

• Own BPOP into the next 2-6 weeks only on pullbacks, not strength; upside is tied to a capital-optimization announcement, but downside is sharp if guidance is merely incremental.
• Pair trade: long BPOP / short a lower-ROTE regional with weaker payout flexibility over the next 1-2 quarters; the cleaner balance-sheet monetization story should outperform if rates stay stable.
• Use a call spread on BPOP rather than outright stock for the next earnings cycle; the setup is catalyst-driven, but premium should be capped by already-elevated expectations.
• If management confirms preferred issuance or other CET1 relief, add on confirmation and target a 10-15% move over 1-3 months; if no announcement comes, cut quickly as the re-rating thesis weakens.
• For income-oriented accounts, wait for any post-announcement dip to initiate/add, since the dividend-growth angle becomes more compelling if capital return is paired with limited credit noise.