Wall Street analysts are wasting no time trying to make some big calls on stocks swept up in talk of the Silicon Valley Bank and Signature Bank meltdowns, even if it means forgetting the stock-picking lessons learned during the height of 2008. Have to go /2009 financial crisis.
The collapse of Silicon Valley Bank on Friday was the second largest bank failure in the US, while Signature Bank represented the third largest banking bust.
Regulators moved late on Sunday to backstop bank depositors in a bid to prevent the start of a wider financial system crisis.
Despite extraordinary efforts, regional bank stocks such as First Republic (FRC) plunged 65% as of Monday afternoon. Western Alliance Bancorp (WAL) fell 61%. Charles Schwab (SCHW) shed 11% after issuing a press release that reaffirmed confidence in its business and its recent business trends.
Even the mighty JPMorgan (JPM) saw its market capitalization shrink by 2% in afternoon trading.
“We have our least favorite outlook on the US financial sector,” warned Solita Marcelli, UBS chief investment officer for the Americas. “While some selling at some banks seems overdue, it is hard to know when the ‘crisis of confidence’ will improve.”
Here are some bullish bank stock calls that caught Yahoo Finance’s attention amid a frenzied day for investors:
First Republic Stock Tank. JP Morgan says Buy.
JP Morgan analyst Steven Alexopoulos makes his case on First Republic Bank:
“Despite industry headwinds, First Republic continues to grow its liquidity position and meet customer needs. In a press release issued Sunday evening, First Republic further strengthened its existing liquidity position, Which is now over $70 billion (all unused) and includes borrowings. Capacity from the Fed, access to funding from the FHLB. [Federal Home Loan Banks], and access to additional financing. Note, this total amount of liquidity does not include any amount First Republic is eligible to receive under the Fed’s new bank term funding program announced yesterday. Additionally, Founder and Executive Chairman Jim Herbert and CEO and President Mike Roeffler said the company continues to loan, process transactions and meet customers’ needs through exceptional customer service.
We will be a buyer of FRC on the new development. Within our coverage, FRC was one of the banks that had sharply deteriorated in the recent past, and following this update, we would be a buy on this weakness of FRC shares as the bank filed a press release Along with the bold steps of the agencies will be beneficial. Highlighting access to $70B in liquidity in addition to new Fed accommodation.”
JPMorgan a ‘stronghold’ investment in stock banking, Wells Fargo says
Wells Fargo Bank Analyst mike mayo Upgraded his rating to Overweight on JPM:
“JPM embodies our theme of ‘Goliath Is Winning’, which should benefit both offense (market share gains) and defense (more diversification) in these less certain times.” JPM is aided by its “Fortress’ Balance Sheet” Has been battle-tested through recession. ; As the largest US bank, it is emblematic of the de-risking of the bank industry that has occurred since the GFC [Great Financial Crisis] leverage (about 1/3 as much), liquidity (estimated at 50%+ higher), and losses (structurally lower); Recent industry developments should further the ability to gather core funding and act as a source of strength.
JPM has gained meaningful market share in each of its business lines (around 10% share on average), and has previously excelled at a time when other financial firms have had issues; This is aided by its multi-channel, multi-product and multi-geographical approach – ie diversification benefits crime as well.”
Citi defends Charles Schwab stock
Citi analysts Chris Allen and Alessandro Balbo upgraded their ratings on Charles Schwab from neutral to buy, noting the stock’s “compelling” entry point:
“We look at near-term revenue/earnings from rising funding costs and continued client cash sorting, but we believe these are reflected in the current stock price. While client cash sorting is a pressure point and we continue to see volume At higher levels than in previous cycles, we see a material risk to deposit Charles Schwab given the structure of its deposit base and customer protection ($750K in insurance given 3 bank charters) Do not see
Brian Sozzi is the executive editor of Yahoo Finance. Follow Sozy on Twitter @BrianSozzi and on LinkedIn,
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