First Horizon (FHN) has limited upside potential unless another merger and acquisition deal emerges, UBS Securities said in a Tuesday note.

The firm said management's recent comments make that outcome look increasingly unlikely and suggest the bank may be a near-term acquirer instead, which could reduce the deal premium still embedded in the current valuation.

UBS said the bank should see a greater mix shift toward net interest income after the March repricing of the curve.

The firm said First Horizon remains among the most asset-sensitive banks, but a flatter yield curve and higher mortgage rates could weigh on its fixed income and mortgage businesses.

UBS assumed coverage of First Horizon with a neutral rating and lowered its price target to $25 from $29.

Shares of First Horizon were down more than 1% in Tuesday trading.

Price: 23.00, Change: -0.29, Percent Change: -1.22