This Time Will Be Different, Buy Financial Stocks
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Price: $141.88 -1.38%
Rating Summary:
31 Buy, 11 Hold, 2 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 12 | Down: 22 | New: 48
Rating Summary:
31 Buy, 11 Hold, 2 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 12 | Down: 22 | New: 48
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Since March 21st, bank stocks have underperformed the market by about 3 percent. The downturn is one of six dips experienced in financial stocks since 2009. The previous five dips have resulted in a sell-off of 20 percent, but analysts at Oppenheimer think this time will be much different given significantly different fundamentals that should drive financial stocks higher.
"While credit quality has been steadily improving for more than two years now and loans have been growing for more than a year, 1Q12 results marked the first time since June 2010 that consensus estimates for 2012 went up, not down," according to statements made by analysts at Oppenheimer.
The research report goes on to say that "1Q12 results demonstrated that the poor trading results of late 2011 were indeed volume-related."
To further support the case for a rise in financials, the report notes several key metrics, including trading profits which have rebounded to $46B from $22B. Margins in commercial banking have stabilized, and fee income is up 10.2%. While litigation charges and mortgage related costs remain high, analysts expect positive operating leverage going forward.
Oppenheimer recommends the following financial stocks: (NYSE: C), (NYSE: COF), (NYSE: JPM), (NYSE: MS), (NYSE: USB) and (NYSE: WFC).
"While credit quality has been steadily improving for more than two years now and loans have been growing for more than a year, 1Q12 results marked the first time since June 2010 that consensus estimates for 2012 went up, not down," according to statements made by analysts at Oppenheimer.
The research report goes on to say that "1Q12 results demonstrated that the poor trading results of late 2011 were indeed volume-related."
To further support the case for a rise in financials, the report notes several key metrics, including trading profits which have rebounded to $46B from $22B. Margins in commercial banking have stabilized, and fee income is up 10.2%. While litigation charges and mortgage related costs remain high, analysts expect positive operating leverage going forward.
Oppenheimer recommends the following financial stocks: (NYSE: C), (NYSE: COF), (NYSE: JPM), (NYSE: MS), (NYSE: USB) and (NYSE: WFC).
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