Morgan Stanley has moved Truist Financial (NYSE: TFC) up the coverage scale, raising its recommendation to Overweight from Equalweight and lifting its 12-month price target to $69.00 from $56.00. The new target implies roughly a 33% upside from the recent share price of $51.90.
The upgrade reflects Morgan Stanleys view that Truist holds an unusually large cushion of capital above regulatory minimums. The bank estimates approximately $14.6 billion of excess capital relative to regulatory requirements, or about 22% of Truists market capitalization. With a total market capitalization of $65.5 billion, Morgan Stanley calls this the largest excess-capital position among its coverage universe.
Regulatory capital metrics show common equity tier 1, or CET1, at 10.8% today, and Truists management has publicly signaled an intention to work this down toward a 10% target over the next two years. Morgan Stanleys modelling goes further, projecting CET1 of 9.9% in 2027 and 9.4% in 2028. That path reflects the assumption of faster and more aggressive capital deployment than the broader Street currently anticipates.
Part of the firms case rests on higher loan growth. Morgan Stanley has raised its loan growth assumptions for Truist to 4.7% in 2026 and 5.0% in 2027, from prior forecasts of 3.8% in each year. Coupled with valuation metrics the analyst describes as attractive - a price-to-earnings ratio of 13.5 and a PEG ratio of 0.95 - the uplifts in growth and capital return underpin the rosier outlook.
Truist management has set a target for roughly $4 billion of share buybacks in 2026. Morgan Stanley, however, expects buybacks to step up to about a $5 billion annual pace in both 2027 and 2028, ahead of consensus assumptions of $3.9 billion and $3.7 billion, respectively. The firm also estimates the current buyback earnback period at about three years, which it notes is the second shortest across its coverage group.
For income-focused investors, the shares show a notable yield profile. Truist pays a regular quarterly common dividend of $0.52 per share, payable in March 2026, and the company has maintained dividend distributions for 54 consecutive years. The regular dividend yield stands at 4.01%. The company also declared dividends on several series of preferred stock.
Morgan Stanley sees mergers and acquisitions as unlikely in the near term, given managements emphasis on internal growth options. The analyst adds that reaching a 15% return on tangible common equity, or ROTCE, by 2027 would require a material acceleration in capital deployment, primarily through stronger loan origination and enlarged buybacks.
Quarterly results and other corporate actions
In recent filings, Truist reported fourth-quarter 2025 results that missed consensus estimates on both earnings and revenue. Reported earnings per share were $1.04, compared with an expected $1.09, a negative surprise of 4.59%. Revenue for the quarter came in at $5.25 billion versus the consensus forecast of $5.31 billion, a shortfall of 1.13%.
The company also announced a $1.25 billion issuance of senior notes, with the offering registered under the Securities Act of 1933.
Alongside the financial results and capital actions, a separate broker reiterated an Outperform rating for Truist, citing solid core results, managements shareholder-value focus, the banks diversified business model, and a strong franchise position as supporting factors for that view.
Market context and recent performance
Truist shares have delivered notable price momentum in recent months, with a 19.4% return over the last six months. Morgan Stanleys upgrade and higher target signal the firms expectation that faster capital deployment via loans and buybacks will be the primary vehicle for shareholder returns over the next several years.
While the upgrade centers on capital return potential and improved lending growth assumptions, execution on buybacks and loan growth, together with capital ratios, will be key metrics to monitor going forward.