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Banks Gain on Jobs Data: Financial Winners

Stocks in this article: C RF NYCB I:BKX

Large-cap banks seeing shares rise 3% included Morgan Stanley (MS), which closed at $20.19; Bank of New York Mellon (BK), at $27.29; Comerica (CMA), closing at $37.13; Northern Trust (NTRS), at $53.47; SunTrust (STI), at $29.42; and State Street (STT), which closed at $49.39.

Shares of Citigroup (C) rose 2.5% to close at $42.43, after Deutsche Bank analyst Matt O'Connor reiterated his "Buy" rating for the bank company and raised his price target for the shares to $46 from $40.

O'Connor said that his firm's "base case" estimates called for the U.S. economy to grow at an annual rate of 2.5% through 2015, and said that Citigroup "is best positioned for this," because of the company's leverage to an improved housing market, relatively low interest rate because of its international exposure, and also because of the company's strong and growing capital levels.

O'Connor and his colleague Dave Rochester took an unusual (for sell-side analysts) three-year view in recommending four bank stocks as good choices for investors through 2015.

Regions Financial

Shares of Regions Financial trade for 1.1 times their reported Sept. 30 tangible book value of $7.02, and for 9.7 times the consensus 2013 earnings estimate of 78 cents a share, among analysts polled by Thomson Reuters. The consensus 2014 EPS estimate is 81 cents.

The shares are up 6% so far in 2013, after returning 67% during 2012, as the company underwent a significant transformation, selling its Morgan Keegan brokerage subsidiary to Raymond James Financial during the first quarter for $900 million, followed by a $930 million common equity raise and then the full redemption in April of the $3.5 billion in preferred shares held by the U.S. Treasury for bailout money provided through the Troubled Assets Relief Program in November 2008.

O'Connor on Friday reiterated his "Hold" rating for Regions, while raising his price target for the shares by 50 cents to $7.00, saying that his price target "assumes RF shares trade roughly in line with our target group multiple of 10.5x our 2014E." The analyst estimates that Regions will earn 74 cents a share this year, with EPS increasing to 75 cents in 2014 and 79 cents in 2015.

RF Chart RF data by YCharts

Interested in more on Regions Financial? See TheStreet Ratings' report card for this stock.


-- Written by Philip van Doorn in Jupiter, Fla.

>Contact by Email.

Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.
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