Saying that Citigroup and KeyCorp "could rise" by beating consensus first-quarter earnings estimates, and that "expectations may be a bit high, for Comerica (CMA), TCF Financial (TCB) and Wells Fargo (WFC - Get Report), the analyst reiterated seven buy ratings and three hold ratings.
O'Connor also said that the 26% year-to-date return of the KBW Bank Index (I:BKX) versus a 12% return of the S&P 500 (SPX.X) is a "big move, banks are still down 9% since the Feb. 14, 2011 peak," and that although "the risk/reward is less compelling now vs. 3 months ago, we remain positive (albeit more selective)," with his "top picks" being JPMorgan Chase (JPM - Get Report) and KeyCorp.
The analyst raised his price targets for the following three bank stocks with "Hold" ratings:For Bank of America (BAC - Get Report), O'Connor raised his price target to $9.00 from $7.50. The company is scheduled to report its first-quarter results on April 19, and O'Connor estimates earnings of 20 cents a share, which is ahead of the 13-cent consensus among analysts polled by Thomson Reuters. Bank of America's shares have returned 72% year-to-date through Thursday's close at $9.53, following a 58% plunge during 2011. For the past 52 weeks, the shares have returned a negative 28%. O'Connor increased his price target for Comerica of Dallas to $29 from $25, saying the "Stock is up sharply this year (+26%), but there's little (if any) benefit to