Raymond James Highlights Top Banking Stocks

Raymond James has initiated and resumed coverage on several banking stocks, highlighting opportunities across national consumer and regional community banking segments. The firm's analysis points to improving fundamentals, including margin expansion, credit stabilization, and enhanced capital generation, as key drivers for the group.

Ratings range from Strong Buy to Outperform, based on each institution's growth prospects, profitability metrics, and valuation. The coverage includes both large consumer banks and smaller regional players.

Ally Financial Receives Strong Buy

Raymond James resumed coverage of Ally Financial Inc. With a Strong Buy rating and a $55 price target. The firm cited improving net interest margin, stabilizing auto credit trends, and stronger capital generation. These factors are expected to support a meaningful step-up in earnings and return on tangible common equity.

The balance sheet remix should continue to expand the core net interest margin. Improving profitability and capital generation could create greater capacity for share repurchases. Raymond James estimates earnings per share of $5.25 for 2026 and $6.50 for 2027. The firm views the valuation as attractive at approximately 6.5 times the 2027 EPS estimate. The $55 price target implies roughly 8.5 times earnings and 1.1 times forward price-to-tangible book value.

In recent news, Ally Financial reported second-quarter 2026 adjusted net revenue of $2.3 billion, a 10% increase from the prior year. Its adjusted earnings of $1.21 per share came in just below analyst estimates.

Community Trust Bancorp Initiated at Outperform

Raymond James initiated coverage of Community Trust Bancorp with an Outperform rating and an $82 price target. The firm described the company as an efficient, deposit-rich community banking franchise with organic growth opportunities across Kentucky, West Virginia, and Tennessee.

Continued efforts to extend reach into higher-growth regions could support approximately 7% loan growth in 2026 and 2027. The company's sub-50% efficiency ratio and 1.6-1.7% return on assets should sustain above-peer profitability, despite some near-term margin pressure. Shares trade at 11.6 times the 2027 EPS estimate and 1.7 times tangible book value per share.

Following its second-quarter results, Piper Sandler raised its price target on Community Trust Bancorp to $81 from $76. That analyst cited stronger net interest income and double-digit organic growth in both loans and deposits.

Mercantile Bank Corp Viewed as High-Quality Franchise

Raymond James initiated coverage of Mercantile Bank Corp at Outperform with a $65 price target. The firm views Mercantile as a high-quality Michigan banking franchise with an attractive growth profile, healthy profitability, and pristine credit performance.

Continued market expansion in Southeast Michigan should contribute to loan growth in the 5-6% range. Modest net interest margin expansion supports expectations for upper-single-digit pre-provision net revenue growth. Credit remains a key differentiator, with non-performing loans at just 12 basis points.

Mercantile Bank announced second-quarter 2026 adjusted earnings of $1.53 per share, exceeding analyst expectations. Subsequently, Keefe, Bruyette & Woods raised its price target on the company to $64 from $60, citing the strong operating earnings.

The firm's analysis, as reported by Investing.com, highlights specific valuation metrics and growth expectations for each covered bank.