JP Morgan Downgraded, Bank Of America And Wells Fargo Upgraded: What's Behind Deutsche Bank's Latest Analyst Ratings?

Deutsche Bank analyst Matt O-Connor revised ratings on JP Morgan Chase & Co. JPM, Bank of America Corporation BAC and Wells Fargo & Company WFC.

JP Morgan: The analyst downgraded the rating to Hold from Buy while retaining the price target at $235.

The analyst writes that JPM shares have led bank stocks YTD with a 30% gain driven by higher net interest income, strong trading results, recovery in investment banking, and solid credit conditions, aside from credit card normalization.

However, with a lot of positive news already priced in, the analyst sees a limited near-term upside.

O-Connor expects flattish EPS in 2025, with pressures on net interest income and ongoing investment spending likely offsetting gains in fee revenues.

While buybacks are expected to increase, the current share price may be too high for JPM to ramp up buyback activity significantly, adds the analyst.

Read: JPMorgan Sued For Allegedly Profiting From Customers’ Idle Cash: Report

Bank Of America: O-Connor boosted the rating to Buy from Hold and maintained the price target at $45.

The analyst writes that the recent decline in BAC shares presents a more attractive entry point and is largely due to Berkshire Hathaway’s share sales and concerns about net interest income (NII) in light of anticipated rate cuts and sluggish loan growth.

Related: Warren Buffett Sells Another $982M Worth Of Bank Of America Shares — What You Should Know

Despite recent concerns, BAC’s valuation remains attractive, with key positives including expected improvement in net interest margin (NIM) as low-yield assets roll off and benefit from increased focus on investment banking and trading.

Also, strong expense management leading to significant operating leverage, effective capital allocation and a solid credit underwriting track record are among the tailwinds, says the analyst.

Wells Fargo: The analyst upgraded the bank to Buy from Hold and maintained the price target at $65.

The analyst says the rating reflects recent weakness, presenting a better entry point. Near-term concerns about net interest income and capital outlooks, along with regulatory risks, seem more priced in now.

In the long-term, WFC stands to benefit from potential earnings boosts once the asset cap is lifted, enhanced by increased revenues and improved efficiency, writes the analyst.

O-Connor adds that the bank’s investments in trading, investment banking, and credit cards are also expected to drive growth.

Price Action: WFC shares are up 0.50% at $58.77, and BAC is up 0.09% at $40.78, while JPM is down 0.90% at $222.79 at the last check Tuesday.

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.