Market Overview

12 Big Banks To Watch Ahead Of The Coming Fed Stress Test

12 Big Banks To Watch Ahead Of The Coming Fed Stress Test
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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 (NYSE: BAC), 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 (NYSE: C), 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 (NYSE: GS), Buy

Analysts like the company’s capital market leverage and believe the business mix is underappreciated.

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• JP Morgan Chase & Co (NYSE: JPM), Buy

Analysts see strong spending discipline and capital allocation and believe that the stock is an attractive valuation.

• Morgan Stanley (NYSE: MS), 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 (NYSE: BKU), Hold

Analysts see the bank’s expansion into New York driving strong loan growth.

• First Horizon National Corporation (NYSE: FHN), Hold

Analysts believe that the company will continue to struggle with sluggish revenue trends, and additional cost savings will be difficult.

• American Express Company (NYSE: AXP), 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 (NYSE: ALLY), 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 (NYSE: COF), Buy

Analysts believe in the strong company-specific asset growth opportunities and feel that the stock is an attractive valuation.

• Discover Financial Services (NYSE: DFS), Hold

Analysts see little EPS upside from loan growth, weak net interest margins and mounting expenses through 2016.

• Santander Consumer USA Holdings Inc (NYSE: SC), Buy

Analysts like the risk/reward balance given conservative credit expectations and an increased focus on an ROE-based business model.

Disclosure: the author owns shares of Bank of America.

Image credit: Billy Hathron, Wikimedia

Latest Ratings for BAC

Apr 2018CitigroupMaintainsNeutralNeutral
Apr 2018BarclaysMaintainsEqual-WeightEqual-Weight
Mar 2018Credit SuisseMaintainsOutperformOutperform

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