In a recent report, analysts at Deutsche Bank gave an updated outlook for large cap financial stocks. With the Federal Reserve Stress Test results due out on March 5 and the Comprehensive Capital Analysts and Review (CCAR) results set to be released on March 11, many investors may be looking to take a position in big financial stocks in upcoming days.
Here is Deutsche Bank’s take on some big names:
• Bank of America Corp BAC 2.73%, Buy
Analysts see more cost savings on the way and a well-levered balance sheet positioned to succeed in a higher-rate environment.
• Citigroup Inc C 0.61%, Buy
Analysts believe that Citi’s 2015/2016 earnings guidance is too high, but they believe that earnings risk is already priced into the stock and Citigroup is an attractive value play at current levels.
• The Goldman Sachs Group Inc GS 0.57%, Buy
Analysts like the company’s capital market leverage and believe the business mix is underappreciated.
• JP Morgan Chase & Co JPM 0.72%, Buy
Analysts see strong spending discipline and capital allocation and believe that the stock is an attractive valuation.
• Morgan Stanley MS 1.45%, Hold
Analysts believe that is it unlikely that Morgan Stanley will achieve double-digit return on equity (ROE) and feel the stock has already priced in a lot of good news.
• BankUnited Inc BKU 0.18%, Hold
Analysts see the bank’s expansion into New York driving strong loan growth.
• First Horizon National Corporation FHN 0.7%, Hold
Analysts believe that the company will continue to struggle with sluggish revenue trends, and additional cost savings will be difficult.
• American Express Company AXP 1.31%, Hold
Analysts like the company’s leverage to improving US GDP growth, consumer spending and low interest rates but are uncertain of its earnings growth potential.
• Ally Financial Inc ALLY 1.41%, Buy
Analysts see a reduction in funding costs coming after the CCAR results and believe that Ally offers an attractive valuation.
• Capital One Financial Corp COF 0.64%, Buy
Analysts believe in the strong company-specific asset growth opportunities and feel that the stock is an attractive valuation.
• Discover Financial Services DFS 0.21%, Hold
Analysts see little EPS upside from loan growth, weak net interest margins and mounting expenses through 2016.
• Santander Consumer USA Holdings Inc SC 0.09%, Buy
Analysts like the risk/reward balance given conservative credit expectations and an increased focus on an ROE-based business model.
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