Bank of America Seen As a Safe Haven... Seriously

NEW YORK (TheStreet) -- Bank of America (BAC), long the doormat of the banking sector, received on upgrade to "overweight" from "equal weight" on Sunday night as Evercore analyst Andrew Marquardt contends the bank will benefit from a recovering U.S. housing market and is less exposed to Europe than peers such as Citigroup (C) and JPMorgan Chase (JPM).

Evercore, which also recommends Wells Fargo (WFC), argues investors will take refuge from turmoil in international markets by increasing their allocation to U.S. banks.

The U.S. economy is "still in repair/recovery mode," while international markets are "more concerning, which should ultimately benefit the U.S. banking sector from a flight-to-safety perspective and market share opportunity as global banks continue to be bailed out, shed assets, and build capital," Marquardt writes. "We would not be surprised if investors continue to rotate into U.S. banks towards a more market-weight position as we saw briefly earlier this year."

The Evercore report does not directly address Friday's weak U.S. jobs report, which sent shares of U.S. banks sharply lower. Bank of America lost 4.49% on Friday, while shares of Wells Fargo--which had been viewed as a safe haven from European storms and largely immune to the kind of multi-billion dollar trading blowup that surfaced recently at JPMorgan--lost 5.90%.

Still, there is a clear argument to be made that U.S. housing is indeed on the mend contributing to Bank of America's recent outperformance during a banking sector selloff.

Marquardt further contends that Bank of America has more room to cut expenses than peers, and has not yet seen the benefit of recent cost cutting initiatives.

Marquardt's bullish call stands in marked contrast to a report from FBR Capital Markets on Monday entitled "Batten Down the Hatches: Moving to the Sidelines in the Bank Space," which cites macroeconomic concerns in lowering estimates for several banks. UBS also revised bank estimates lower on Monday, as did Nomura on Friday .

-- Written by Dan Freed in New York.

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