It’s not just regional bank stocks that have been hit by the recent banking crisis, large-cap bank stocks have also plummeted. But some analysts say the slide is overdone, and retail investors flocked to buy the fall in prices at America’s largest traditional banks last week. Still, there may be more room to run. JPMorgan lost nearly 6% last week while Bank of America fell 8% over the same period. Citi lost about 8.5%. “The severe oversold levels in financials could reverse as conditions for a major recovery in bank stocks mature further,” Ben Emons, senior portfolio manager at NewEdge Wealth Management, said in a statement Sunday. Meanwhile, Kenny Polcari, chief markets strategist at SlateStone Wealth, described the pullback as “an opportunity for those with strong stomachs,” citing stocks like JPMorgan, Bank of America, Citi and Wells Fargo. UBS said in a March 16 note that large-cap banks’ valuations will recover from “the lows of the liquidity crisis.” Big banks are “big beneficiaries” and the fundamentals of JPMorgan Chase, Bank of America, Wells Fargo and Citi look “pretty strong”. The top three benefit from “fully scaled, granular” personal deposits, UBS said, and Citi is popular with multinationals using its “best” treasury services. For those looking to invest, CNBC Pro takes a look at what analysts are saying about JPMorgan Chase and Bank of America in particular. Here are some key metrics, including how well capitalized they are, their profitability, and the nature of their deposits: Bank of America: “Strong Balance Sheet” Vance Howard, CEO of Howard Capital Management, told CNBC that he was “patient” as the banking crisis eased calm,” he would choose Bank of America if investors wanted to invest in this market. This view is shared by Cole Smead, CEO of Smead Capital Management, who said central bank rate hikes would help lenders “that don’t do stupid things in their assets.” “Bad stock markets have left investment banks as the laggards, but commercial banks look good next to them,” he told CNBC via email, citing Bank of America (and JPMorgan) as stocks he particularly likes While Howard also likes JPMorgan, he told CNBC Pro that Bank of America is currently selling at a better price, which “takes the risk of a better to reward your choice”. “We believe this stock can weather the storm and potentially be an attractive long-term buy for investors,” he said. UBS also said that Bank of America’s stock underperformance last week was “confounding,” adding, “We believe there is a particularly compelling opportunity for BAC at this level, given an already prime pre-flight deposit base.” to- Quality advantages, solid capital and strong liquidity, and a solid balance sheet built on more than a decade of “responsible growth” – which should be particularly valuable in a recession (which now feels inevitable). The problem of uninsured deposits is in the Spotlighted following the collapse of Silicon Valley Bank, which held large numbers of uninsured deposits above the Federal Deposit Insurance Corporation’s guaranteed limit. However, Bank of America only has 8% uninsured deposits as a proportion of its total deposit liabilities. This was the second-lowest in a ranking of the top 100 US banks, according to Raymond James data March 16. Analysts covering the stock gave it an average of 45% potential upside and, accordingly, 50% gave it a buy rating, per FactSet. JPMorgan Chase: “Battle-hardened” Wells Fargo struck a bullish tone on JPMorgan Chase in a series of notes last week, upgrading the stock to overweight and raising its price target to $155, giving the stock around 23% upside potential. “JPM has proven itself through downturns,” said Wells Fargo. “As the largest US bank, it embodies the de-risking of the banking industry that has occurred since [global financial crisis] in terms of leverage (nearly 1/3 as much), liquidity (estimated at 50% and up), and losses (structurally lower).” Morgan Stanley said in a March 20 note that it leans toward defensive stocks, with a preference “The best positioned banks will be those with higher capital, excess liquidity, more resilient deposit bases and/or better quality loan books,” she said, naming JP Morgan as a stock in which she is overweight. Wells Fargo analysts said US banks are stronger, have more capital and should continue to gain market share relative to European banks. US banks would also likely have been prepared for Credit Suisse’s issuance, they wrote in a note before the UBS sale. Analysts say JPMorgan is the “strongest” bank, and Citi should benefit as well. However, in uninsured deposits, JPMorgan Chase scores significantly higher at 27.2% of uninsured deposits than Bank of America’s deposit liabilities, ranked 73rd. in list of top 100 US banks according to data by Raymond James Analysts covering the stock give it an average upside potential of 25% and 63% recommend it as a buy, according to FactSet – CNBC’s Michael Bloom has admitted contributed to this report.
