Citing the 73% surge in Bank of America stock and a valuation that is "less compelling," Evercore analyst Andrew Marquardt lowered the banking giant to equal weight from overweight. He noted that while Bank of America has closed the gap with Citigroup (C) on various metrics, it still trades at a discount to other large-cap peers. However, he argues a discount is warranted, given "lower returns and lower confidence in ultimate earnings power."
Nonetheless, Marquardt likes Bank of America longer term, arguing it has done a solid job of shoring up its capital base. Bank of America shares were flat in early trading Friday.
Noting bank outperformance year to date and a less compelling valuation, Evercore's analysts "remain positive on the sector longer-term as we still see more upside than downside risk." Top picks include JPMorgan Chase (JPM), Wells Fargo (WFC), Comerica (CMA), Zions Bancorp (ZION), Synovus (SNV).Other moves by Evercore analysts included downgrades to SunTrust (STI - Get Report), First Horizon National (FHN - Get Report)and Associated Bancorp (ASBC)and an upgrade to Huntington Bancshares (HBAN - Get Report) Marquardt's downgrade to Associated to underweight from equal weight cited "mixed earnings power and valuation." Nonetheless, he believes "capital remains strong," and he sees a possibility of share buybacks. In raising Huntington to equal weight from underweight, Marquardt cited improved earnings and "greater confidence in ability to deploy excess capital," following recent regulatory stress tests by the Federal Reserve. Marquardt also noted Huntington shares trade at just over 10 times 2013 earnings versus a 12.7 multiple for peers. Huntington shares were slightly higher in early trades Friday.