Why BofA Is Raising Price Targets For Banks

BofA Securities is raising its price targets for large cap banking stocks by around 15% on average, reflecting an improved economic outlook. 

The US Banks Analyst: Erika Najarian said in a note that banking stocks recorded significant gains this week after a positive update on Pfizer Inc’s PFE coronavirus vaccine study.

The US Banks Thesis: Bank stocks were also boosted by the removal of the election overhang, while a split Congress indicates that there may not be any meaningful shift in tax and regulatory policy, the analyst said.

“Although it may be too early to play the 'return to normal' card, bank management commentary at our 29th annual Future of Financials conference this week shared a relatively optimistic tone about the economic outlook and emphasized balance sheet strength, the resiliency in operating income, and a strong recovery in EPS given high levels of loan loss reserves,” the analyst said. 

“Government stimulus and payment deferral programs have supported the resiliency of the US consumer, delaying the expected realization of peak loan losses to 2H21.” 

The analyst raised the price targets for:

• Wells Fargo & Co WFC from $27 to $32
• Citigroup Inc C from $70 to $79
• JPMorgan Chase & Co. JPM from $117 to $131
• Truist Financial Corp TFC from $50 to $57
• Citizens Financial Group Inc CFG from $32 to $37
• Comerica Incorporated CMA from $45 to $53
• Fifth Third Bancorp FITB from $28 to $32
• First Republic Bank FRC from $145 to $154
• Huntington Bancshares Incorporated HBAN from $11 to $13
• KeyCorp KEY from $13 to $15
• M&T Bank Corporation MTB from $120 to $132
• PNC Financial Services Group Inc PNC from $138 to $150
• Regions Financial Corp RF from $14 to $16
• US Bancorp USB from $41 to $44
• Zions Bancorporation ZION from $37 to $41