The Trump rally has lifted stocks across the board, but it seems that the ride is stalling out now, or at least settling down. Financial stocks have perhaps seen the biggest boom since this rally started in late November. But is it safe to keep buying into these stocks now that the rally is seemingly subsiding?
First we have to understand that analysts still see quite a few tailwinds for this industry. Fed Chair Yellen had made a compelling case for bank stocks just by hiking interest rates, with seemingly more hikes on the horizon. Consumer confidence is also the highest that it has been in 16 years. Also many of the major banks are trading on a relatively cheap basis when compared to the broad markets.
Most analysts have taken a positive stance on the financial sector as a result of these trends. Even David Tepper who called the bottom amidst the financial crisis in 2009, thinks that stocks still have a lot of room to run from here.
24/7 Wall St. reviews dozens of analyst research reports each day of the week, which is hundreds of analyst calls reviewed each week. In this case, we have picked out some of the best ideas from analysts on the financial sector.
Merrill Lynch recently commented that it still wants clients buying Citigroup Inc. (NYSE: C), JPMorgan Chase & Co. (NYSE: JPM) and Wells Fargo & Co. (NYSE: WFC). Although, in the prior week, Deutsche Bank issued its top finance picks, which were not the major banks. Separately, 24/7 Wall St. featured seven stocks that have over 50% to 100% upside, but these don’t fall under the financial sector.
Capital One Financial Corp. (NYSE: COF) was raised to Buy from Neutral and the price target was raised to $105 from $97 (versus an $84.17 prior close) at Instinet on March 29. Capital One’s 52-week range is $58.03 to $96.92 and its consensus target price is $99.32. The stock most recently closed at $86.66.
Morgan Stanley (NYSE: MS) was raised to Buy from Hold with a $47 price target (compared with a $42.49 prior close) at Deutsche Bank on March 29. The upgrade included positive notes about trading and fixed income. The 52-week range is $23.11 to $47.33, and the consensus analyst target is $47.08. Shares closed Friday at $42.84.
PrivateBancorp Inc. (NASDAQ: PVTB) was raised to Outperform from Market Perform with a $63 price target (versus a $55.51 close) at Keefe Bruyette & Woods on March 27. Shares ended the week at $59.37, with a consensus price target of $57.49 and a 52-week trading range of $34.00 to $60.43.
Synchrony Financial (NYSE: SYF) was initiated as Outperform at Wells Fargo on March 29. The stock closed most recently at $34.30, with a consensus analyst price target of $42.57 and a 52-week trading range of $23.25 to $38.06.