Deutsche Bank analyst Matt O-Connor has revised his ratings for three major US banks: JP Morgan Chase & Co. (JPM), Bank of America Corporation (BAC), and Wells Fargo & Company (WFC).
JP Morgan:
O-Connor downgraded the rating for JP Morgan to Hold from Buy, while maintaining the price target at $235. He believes that the bank’s recent strong performance, driven by higher net interest income, robust trading results, and a rebound in investment banking, has already been priced into the stock. Looking ahead, O-Connor expects flattish earnings per share in 2025, with pressures on net interest income and continued investment spending potentially offsetting gains in fee revenues. While JP Morgan is anticipated to increase buybacks, the analyst believes the current share price might be too high for the bank to significantly ramp up buyback activity.
Bank of America:
O-Connor upgraded Bank of America to Buy from Hold, maintaining the price target at $45. The recent decline in BAC shares, influenced by Berkshire Hathaway’s share sales and concerns about net interest income amid anticipated rate cuts and sluggish loan growth, presents an attractive entry point according to O-Connor. Despite these concerns, Bank of America’s valuation remains compelling, bolstered by expected improvements in net interest margin as low-yield assets mature. The analyst also highlights the bank’s increased focus on investment banking and trading, strong expense management leading to significant operating leverage, effective capital allocation, and a solid credit underwriting track record as positive factors.
Wells Fargo:
O-Connor upgraded Wells Fargo to Buy from Hold, maintaining the price target at $65. The analyst attributes this upgrade to the recent weakness in the bank’s stock, creating a more favorable entry point. While near-term concerns exist regarding net interest income, capital outlook, and regulatory risks, these factors appear to be largely priced in at the current level. O-Connor believes that Wells Fargo stands to benefit significantly in the long term once the asset cap is lifted, driven by increased revenue and improved efficiency. The bank’s investments in trading, investment banking, and credit cards are also expected to contribute to future growth.
Price Action:
At the last check on Tuesday, WFC shares were up 0.50% at $58.77, BAC was up 0.09% at $40.78, and JPM was down 0.90% at $222.79.
Post Views: 22
