Nomura on U.S. Regional Banks: Upgrading ZION, Downgrades BBT
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Price: $68.16 +0.40%
Rating Summary:
13 Buy, 26 Hold, 3 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
Rating Summary:
13 Buy, 26 Hold, 3 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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Nomura on U.S. Regional Banks by Brian Foran
Foran said, "We are upgrading Zions Bancorp (Nasdaq: ZION) to a Buy and downgrading BB&T (NYSE: BBT) to Reduce. At ZION, we revise 2011E normalized EPS from $2.40 to $2.70 to account for capital opportunity, and we increase our price target from $25 to $28, with the view that ZION will trade at 10–11x normalized EPS. At BBT, we cut normalized EPS to $2.75 from $2.90, and we lowered our price target to $26 from $27, implying modest absolute downside. We expect a back-half bounce in GDP. This should be a welcome relief for banks, as bank stocks and GDP estimates have been highly correlated in the past year-and-a-half. That said, the bounce may not be uniform, as GDP and jobs will likely do better than housing, while rates remain low. In our view, this is a recipe for a commercial real estate credit recovery stock (ZION) to outperform one that is positioned for a housing recovery and rising rates (BBT)."
Foran said, "We are upgrading Zions Bancorp (Nasdaq: ZION) to a Buy and downgrading BB&T (NYSE: BBT) to Reduce. At ZION, we revise 2011E normalized EPS from $2.40 to $2.70 to account for capital opportunity, and we increase our price target from $25 to $28, with the view that ZION will trade at 10–11x normalized EPS. At BBT, we cut normalized EPS to $2.75 from $2.90, and we lowered our price target to $26 from $27, implying modest absolute downside. We expect a back-half bounce in GDP. This should be a welcome relief for banks, as bank stocks and GDP estimates have been highly correlated in the past year-and-a-half. That said, the bounce may not be uniform, as GDP and jobs will likely do better than housing, while rates remain low. In our view, this is a recipe for a commercial real estate credit recovery stock (ZION) to outperform one that is positioned for a housing recovery and rising rates (BBT)."
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