BTIG Initiates Coverage on Comerica (CMA), KeyCorp (KEY), SunTrust (STI) at Buy and Zions Bancorporation (ZION) at Neutral
CMA Hot Sheet
Rating Summary:13 Buy, 13 Hold, 3 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 16 | Down: 7 | New: 23
BTIG initiated coverage on four regional banks today as their overall feeling on the sector is positive.
The firm believes the longtime negative sediment on the sector has created an “attractive investment opportunity.” Comerica (NYSE: CMA), KeyCorp (NYSE: KEY) and SunTrust (NYSE: STI) are the most attractive banks within their industry due to their current discounted valuation which the firm calls largely unwarranted.” BTIG anticipates potential significant rebound in 2012.
Comerica, KeyCorp, and SunTrust all have the opportunity to top interest rate and loan growth expectations as current levels are extremely low. The firm believes the banks will begin returning equity to its shareholders in the form of dividends and buybacks as soon as they pass the Federal Reserve’s pending Comprehensive Capital Analysis and Review, which BTIG anticipates will happen with ease.
Throughout 2011, shares of STI fell by 40 percent, shares of CMA fell by 39 percent, and shares of KEY fell by 13%. The firm’s price targets of $30 on STI, $36 on CMA, and $10.50 on KEY call for roughly 36 percent upside. BTIG notes these declines are extreme given that CMA and KEY do not have exposure to mortgage repurchase demands and STI only has slight exposure.
Due to the high level of volatility throughout 2011, many banks opted to stay away from going through with mergers and acquisitions, BTIG does not expect 2012 will see similar trends.
The firm also initiated coverage Zions Bancorporation (Nasdaq: ZION) with a Neutral rating. While shares of ZION do offer investors a discount valuation, an analyst at BTIG comments, “we believe a somewhat cautious stance toward the stock remains warranted in light of uncertainty about the company’s potential for capital deployment.”
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The firm believes the longtime negative sediment on the sector has created an “attractive investment opportunity.” Comerica (NYSE: CMA), KeyCorp (NYSE: KEY) and SunTrust (NYSE: STI) are the most attractive banks within their industry due to their current discounted valuation which the firm calls largely unwarranted.” BTIG anticipates potential significant rebound in 2012.
Comerica, KeyCorp, and SunTrust all have the opportunity to top interest rate and loan growth expectations as current levels are extremely low. The firm believes the banks will begin returning equity to its shareholders in the form of dividends and buybacks as soon as they pass the Federal Reserve’s pending Comprehensive Capital Analysis and Review, which BTIG anticipates will happen with ease.
Throughout 2011, shares of STI fell by 40 percent, shares of CMA fell by 39 percent, and shares of KEY fell by 13%. The firm’s price targets of $30 on STI, $36 on CMA, and $10.50 on KEY call for roughly 36 percent upside. BTIG notes these declines are extreme given that CMA and KEY do not have exposure to mortgage repurchase demands and STI only has slight exposure.
Due to the high level of volatility throughout 2011, many banks opted to stay away from going through with mergers and acquisitions, BTIG does not expect 2012 will see similar trends.
The firm also initiated coverage Zions Bancorporation (Nasdaq: ZION) with a Neutral rating. While shares of ZION do offer investors a discount valuation, an analyst at BTIG comments, “we believe a somewhat cautious stance toward the stock remains warranted in light of uncertainty about the company’s potential for capital deployment.”
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