Investors should buy into First Horizon as it moves out of the shadow of its terminated merger plan, Jefferies said. Analyst Casey Haire upgraded the regional bank to buy from hold. Though Haire lowered his price target by $5 to $13, his new target still implies a 15.7% upside from where shares finished during Tuesday's session. The upgrade comes ahead of an investor day for the company next month. "Though investor days rarely deliver as meaningful catalysts, we view FHN as unique as this will be the first time mgmt. provides guidance in 17 months post TD deal break," he said in a note to clients Wednesday, referencing the termination of the merger between TD Bank and First Horizon announced earlier this month. Shares rose 2.3% in premarket trading. The stock has lost 54.1% this year, meaning it has performed worse than the SPDR S & P Regional Banking ETF (KRE) , which has dropped 30.4% since 2023 began. FHN KRE YTD mountain First Horizon and the KRE He said few banks can match First Horizon's capital strength, which he called a key part of the buy rating. Though he said buybacks are unlikely in the near future given broader economic uncertainty, they should return one day as a way to use excess capital. The stock is also at an approximately 20% discount to peers despite performing in line, Haire said. But there are still challenges ahead for the sold-off regional bank stock, he noted. First Horizon has a weak liquidity profile and should have to give weak expectations for net interest margin, Haire said. He noted the bank has seen 18% deposit runoff since the fourth quarter of 2021, dwarfing the 4% average among peers. First Horizon also has a weak loan-to-deposit ratio, at 96% compared with an 82% average among peers. That should damper estimates. Haire cut the 2023 and 2024 earnings per share estimates to $1.58 and $1.57, respectively, from $1.85 and $1.80, due mainly to the net interest margin outlook. Meanwhile, he said expenses should grow as the company tries to catch up on technology and operations improvements not handled while the merger was happening. First Horizon is also poorly positioned for digesting hits to profitability from regulatory reforms, he said, as the company has a smaller amount of assets than peers but is nearing a $100 billion threshold that has been eyed for increased regulations. He said the company may either find a new strategic partner or acquire other companies to help balance out regulatory headwinds through increased scale. "We believe clarity from upcoming Investor Day and excess capital deployment longer term will enable FHN to close the multiple gaps with peers," Haire said. — CNBC's Michael Bloom contributed to this report.