The largest banking names are in flux following the completion of Federal Reserve stress tests, the announcement of plans by SunTrust (STI) and KeyCorp (KEY) to raise common equity and repay government bailout funds received through the Troubled Assets Relief Program, or TARP; dividend increases by BB&T (BBT), JPMorgan Chase (JPM - Get Report), State Street (STT - Get Report), U.S. Bancorp (USB), Citigroup (C - Get Report) and Bank of New York Mellon (BNY) ; and new or increased share buyback authorizations by JPMorgan, State Street, U.S. Bancorp, Wells Fargo (WFC - Get Report) and BNY Mellon.
On Wednesday, Bank of America (BAC - Get Report) said the Federal Reserve had rejected the company's plan to begin returning capital to shareholders, but planned to submit another plan soon, to begin returning capital to shareholders in the second half of this year.
This week, many analysts have been revising their 2011 and 2012 earnings estimates, raising price targets and there have been a number of ratings upgrades, so this is a good time to take a look at consensus price targets and see which banks analysts believe have the most upside for their shares over the next twelve months.To come up with our list, we isolated the 10 bank and thrift holding companies with the most upside based on mean price targets among analysts polled by Thomson Reuters. We pared down the list by limiting our selections to stocks with average daily trading volume of more than 50 thousand shares, with share prices above a dollar and with at least two buy recommendations from analysts. All data was provided by SNL Financial as of Monday's market close. The list includes two of the "big four," Citigroup and Bank of America. Citigroup's shares are likely to face some pressure over the short term, as the company on Monday announced a 1-for-10 reverse stock split , set to take place after the market close on May 6. For JPMorgan Chase, the mean price target is $55.42, implying 21% upside from Monday's market close at $45.63. Richard Bove of Rochdale Research is even more enthusiastic, with a $60 price target, saying after AT&T (T) announced its deal to purchase T-Mobile from Deutsche Telekom AG (DTE) that as AT&T's advisor on the merger, JPMorgan could eventually earn as much as $500 million from the deal. For Wells Fargo, the mean price target is $38.28, implying 20% upside from Monday's close at $31.88. Let's move on to our select list of 10 liquid bank stocks with the most upside potential: