Right now bank fundamentals are stuck in a tight spot, but this might not be for long after a few major banks report earnings on Thursday morning. With an updated view on the major banking industry, more concerns from earlier this year can be addressed.
Currently, there are concerns in the industry over a still-slow economy and policy uncertainty, which can weigh on loan growth, as well as higher rates affecting mortgage origination volumes. However, there is a positive side. Higher rates are helping net interest margins, credit quality remains excellent and capital return is expected to be higher again in this year’s Comprehensive Capital Analysis and Review (CCAR) stress test process.
As a result, one key analyst thinks that first-quarter results will not be mind-blowing, but instead believes estimates are still biased upward as more rate hikes get built in, deposit betas remain low and credit loss/provision levels prove lower-for-longer. After considering the current climate for banking stocks, Jefferies picked out a couple of its top ideas going forward.
Although Jefferies is positive on these stocks, what might happen is still up in the air until they report Thursday morning. 24/7 Wall St. has included the consensus estimates from Thomson Reuters, a recent trading history and a little color for each major bank.
Citigroup Inc. (NYSE: C): The consensus estimates call for $1.24 in earnings per share (EPS), as well as $17.83 in revenue. Shares were last seen at $58.60 on Wednesday. The consensus analyst price target is $64.74. The stock has a 52-week trading range of $38.31 to $62.53.
JPMorgan Chase & Co. (NYSE: JPM): The analysts’ consensus estimates are EPS of $1.52 and $24.88 billion in revenue. Shares were recently trading at $85.43, with a consensus price target is $91.22. The stock has a 52-week range of $57.05 to $93.98.
Wells Fargo & Co. (NYSE: WFC): The consensus analyst estimates call for EPS of $0.97 and $22.3 billion in revenue. Wells Fargo was trading at $53.42. The consensus price target is $59.07. The 52-week trading range is $43.55 to $59.99.