Bank Of America Issues New Price Targets For These Three Financials

Bank of America released a report with updated price objectives for three financial stocks. The report included detailed explanations for how analysts arrived at the new numbers.
JP Morgan Chase & Co JPM
Target: $68 (13.4 percent upside)
Analysts relied on price to earnings ratio (P/E) price to total book value (P/TBV) and discounted cash flow (DCF) when projecting a price target for JP Morgan. The $68 price objective represents 1.5 times projected 2014 TBV and 11 times projected 2015 earnings per share (EPS). Analysts note that JP Morgan’s projected 10.5 P/E ratio is “overly discounted” compared to the much higher P/E ratios of regional banks but that they believe that big money center banks will continue to trade at a significant discount to their smaller counterparts.
Regions Financial Corp RF
Target: $12 (20.1 percent upside)
Analysts assigned a 1.3 multiple on projected 2014 TBV and a 13 multiple on 2015 EPS estimates to arrive at the $12 price objective for Regions. The report includes a projected total return on common tangible equity (ROTE) for 2013-2014 of 10-11 percent. Analysts include the unknown future credit and interest rate environments as potential risks for Regions.
SVB Financial Group SIVB
Target: $130 (21.2 percent upside)
Analysts project a 2.5 multiple on estimated 2014 TBV and a 20 multiple on 2015 EPS estimates to produce the $130 price target for SVB. DCF analysis assumes a 10 percent cost of capital and a six percent terminal growth rate. Low interest rates and a slowdown in technology-related IPO activity in the market are risks identified by analysts moving forward.
Despite the risks, Bank of America sees significant upside potential in each of these three financial stocks in 2015.