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CLSA Analyst Sees Bank Stocks Gaining 50% Over Next 3 Years

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Bank stocks are expected to gain 50 percent over the next three years, at least according to CLSA's bank analyst Mike Mayo.

Speaking as a guest on CNBC, the analyst doesn't believe bank stocks have moved ahead of themselves in the recent stock market surge.

Mayo justified his bullish stance by highlighting President-elect Donald Trump's economic policies, which will support jobs and GDP growth. He added that a vital component of accelerating jobs and GDP growth is counting banks as a key partner.

Mayo said Trump's administration is expected to help banks in the regulatory environment, not necessarily be removing regulations by stop piling on new ones.

"The most important point - even if you don't get a 'Trump-bump' to the banks, and we think a 'Trump-bump' can add 20 percent to bank earnings, even without that we still think that banks create value for the first time in a decade," Mayo said. "Banks in the U.S. earn their cost of capital and that is what the market is collectively missing."

Here are Mayo's stock ratings and price targets:

  • Bank of America Corp (NYSE: BAC) - Outperform rating, $27 price target.
  • Wells Fargo & Co (NYSE: WFC) - Outperform rating, $64 price target.
  • Goldman Sachs Group Inc (NYSE: GS) - Outperform rating, $275 price target.
  • Morgan Stanley (NYSE: MS) - Buy rating, $54 price target.
  • Citigroup Inc (NYSE: C) - Buy rating, $80 price target.
  • JPMorgan Chase & Co. (NYSE: JPM) - Buy rating, $102 price target.

Latest Ratings for BAC

DateFirmActionFromTo
Nov 2017JP MorganMaintainsOverweight
Oct 2017UBSMaintainsNeutral
Oct 2017BMO CapitalMaintainsMarket Perform

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