More love for BAC following on this morning's "Goldman Sachs: "Buy Bank 0f America Calls" (BAC; FAS; FAZ; XLF)". The stock is down 34 cents at $14.10.
As we mentioned in the earlier post there is a gap in the chart from $13.34 to $13.85 that the stock may want to revisit before heading north with conviction.
Most big banks are undervalued and poised for a stock run up, Susquehanna analyst David Hilder writes. He recommends scooping up shares of the big national banking names. The analyst’s top picks for 2011 are Bank of America and Wells Fargo.
“We expect the three truly national banks — BAC, WFC and JPM — to demonstrate the strength of their franchises and the advantages of scale and leading local-market positions.”
“We expect 2011 to be a year in which BAC more fully demonstrates the earnings power of its broad consumer and commercial banking franchise across deposit-taking, consumer lending, commercial lending, investment banking, institutional trading, and the retail securities brokerage business. Although WFC was not as damaged by the financial crisis as BAC, it has not yet returned to the premium multiple that it once enjoyed and that we believe it will re-earn as the cost savings and revenue growth potential of its Wachovia acquisition are more fully realized.”Susquehanna said it expects “a significant decline in loan loss provisions” as soured loans have been declining in recent quarters. “We believe continued economic recovery will drive stronger commercial loan demand and likely result in higher short-term rates by year-end, which will help spread income,” Susquehanna said.
The analyst said regulatory changes that are forcing lower bank fees and higher capital requirements are a concern, but already baked into the stock prices of big banks....MORE