Marshall & Ilsley: Financial Winners
NEW YORK (
) -- The bulls busted out on regional bank stocks on Thursday, driving up shares of
Marshall & Ilsley
over 12% by the afternoon.
The Milwaukee-based bank appeared to be gaining steam on bullish analyst notes. On Thursday morning, Barclays said M&I's "recent underperformance appears overdone."
Though analyst Jason Goldberg maintained a neutral rating on M&I shares, he predicted additional asset quality improvement and said deposit growth appears strong and that profit margins are holding up as loan demand has gained ground. Goldberg also said he doesn't think M&I will need to raise any additional capital to repay bailout funds in the near-term.
M&I's "recent underperformance appears to have started with its mid-October filing of a shelf registration statement that allows it to raise capital, including equity," said Goldberg. "While the market read into this that a near-term capital raise was eminent, we believe it was done simply because its existing shelf was scheduled to expire on Nov 6. We note this new shelf is very similar to its old one."
His note came on the heels of an Oppenheimer report on Nov. 30, predicting M&I's stock could have 100% upside potential. In recent trading, M&I was up 12.1% at $5.47.
Other regional bank stocks were gaining ground as well.
Fifth Third
(FITB) - Get Report
was up 5.8% at $12.97;
Zions
(ZION) - Get Report
was up 5.1% at $20.88;
Regions Financial
(RF) - Get Report
was up 4.9% at $5.95 and
SunTrust Banks
(STI) - Get Report
was up 4.7% at $25.12.
Large caps were also rising, with the KBW Bank Index gaining 3.6% at 47.50. The upward trend began in the morning after strong home sales data were released and Goldman Sachs turned bullish on bank stocks for the first time in years.
In a report, analyst Richard Ramsden said that, despite ongoing headline risk that's unlikely to abate soon, banks' fundamentals make their stocks undeniably cheap.
" Financials have underperformed for most of year on numerous issues (low rates, capital reform, and mortgage put-back concerns)," Ramsden noted. "While headline risk is unlikely to subside near-term, the more positive growth outlook (24% EPS growth in 2011 vs. 12% for the SPX) and dividend increases should tip the balance towards 'value' vs. 'headline risk.'"
Ramsden highlighted
JPMorgan Chase
(JPM) - Get Report
,
Citigroup
(C) - Get Report
and
Bank of America
(BAC) - Get Report
as top picks while adding
Principal Financial Group
(PFG) - Get Report
to Goldman's "conviction buy" list and upgrading
TD Ameritrade
(AMTD) - Get Report
,
Evercore
(EVR) - Get Report
and
Stifel
(SF) - Get Report
to buy. Other he's bullish on include
Invesco
(IVZ) - Get Report
,
Blackstone
(BX) - Get Report
,
State Street
(STT) - Get Report
,
Simon Property Group
(SPG) - Get Report
and
DR Horton
(DHI) - Get Report
, which are all rated buy.
In recent trading, all of those stocks were trending higher. BofA was up 3.3% at $11.66, Citi was up 3% at $4.43 and JPMorgan was up 2.7% at $39.19. Stifel was surging 5.9% higher at $57.05 while in recent trading Ameritrade was trending 4.8% at $18.22 and Evercore was up 1.7% at $30.48. Blackstone was surging 6.1% at $13.95, with Invesco was up 1.8% at $22.86 and State Street up 1.6% at $45.53. Simon shares were climbing 1.7% at $101.51 and DR Horton was up 3.7% at $10.92.
-- Written by Lauren Tara LaCapra in New York
.
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