20-Year Pro Trader Reveals His "MoneyLine"
Ditch your indicators and use the "MoneyLine". A simple line tells you when to buy and sell without the guesswork. It’s a line on a chart that’s helped Nic Chahine win 83% of his options buys. Here's how he does it.
Morgan Stanley analyst Manan Gosalia revised the rating for the midcap banks Valley National Bancorp (NASDAQ:VLY), Zions Bancorporation N.A. (NASDAQ:ZION), Commerce Bancshares Inc (NASDAQ:CBSH).
The analyst lowered the rating for VLY and ZION to Underweight from Equal-Weight with a raised price target of $8.5 (from $8) and $32 (from $27), respectively.
On the other hand, Gosalia upped the rating for CBSH to Equal-Weight from Underweight at an increased price target to $49 from $48.
The analyst is bearish on the expected higher for longer rate environment, weakening loan growth pressure NII, rising loan losses, and elevated pressurized expense in the market in 2024.
In a higher for longer rate environment, the analyst prefers banks with low loan-to-deposit ratios, granular deposit bases with less reliance on customer deposits, and higher excess capital and liquidity.
VLY: Gosalia thinks the consensus is underestimating the pressure on NII in a higher for longer rate environment, which has a 101% loan-to-deposit ratio (vs. ~84% for peers) that offers lower deposit pricing flexibility.
Gosalia revised FY23 and FY24 EPS estimates to $1.07 (from $1.05) and $0.92 (from $0.97).
ZION: The analyst sees risk-reward towards the downside in a higher for longer rate environment, given the banks' increased risk of non interest bearing (NIB) outflow that needs to be replaced with higher cost client deposits currently off-balance sheet.
The analyst notes that ZION's 2024 estimates are the most susceptible to changes in betas and NIB mix-shift.
Gosalia raised FY23 and FY24 EPS estimates to $4.55 (from $4.47) and $3.72 (from $3.63).
CBSH: Gosalia cites that the bank has underperformed the median bank in the coverage by 700bps on deposit trends, driving a recovery.
The analyst has confidence in CBSH's NII outlook in a higher-for-longer rate environment, given its more granular deposit base (99% of deposit accounts under $250k).
Gosalia boosted FY23 and FY24 EPS estimates to $3.81 (from $3.77) and $3.39 (from $3.30).
Price Action: VLY shares are trading lower by 2.06% at $8.31 and ZION by 2.06% at $33.29, while CBSH shares are trading higher by 0.66% at $47.29 on the last check Wednesday.
20-Year Pro Trader Reveals His "MoneyLine"
Ditch your indicators and use the "MoneyLine". A simple line tells you when to buy and sell without the guesswork. It’s a line on a chart that’s helped Nic Chahine win 83% of his options buys. Here's how he does it.
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