Updated with market close information.
NEW YORK (
was the winner among the largest U.S. banks on Thursday, with shares rising 7% to close at $15.88.
While the broad indexes saw 1% gains, the
KBW Bank Index
rose 3% to close at 39.69, with the 24 index components all showing gains of at least 1%, after the Labor Department reported that initial jobless claims for the week ended Dec. 17 had reached a 44-month low. Initial unemployment claims totaled a seasonally adjusted 364,000, declining from the previous week's revised figure of 368,000.
Morgan Stanley has been one of the more volatile names among the big banks this year, reflecting the company's heavy discount, with shares trading at just 0.6 times their Sept. 30 tangible book value of $25.55, according to SNL Financial.
Evercore Partners analyst Chris Allen on Tuesday initiated his firm's coverage of Morgan Stanley, with an "Equal Weight" rating and $17 price target, saying that "although the company has made great strides in recent periods in terms of repositioning the model and clearing overhangs (MBIA settlement the latest) we see too many uncertainties currently from a regulatory and macro perspective."
Interested in more on Morgan Stanley? See TheStreet Ratings' report card for
rose 6% to close at $27.65. The company's shares also trade for 0.6 times tangible book value. Among the largest U.S. banks, only
Bank of America
trades lower on this basis, at 0.4 times tangible book as of Thursday's close.
Bank of America's shares rose 5% to close at $5.48.
Among the "big four" U.S. banks, Citigroup faces the least exposure from the expected settlement between the largest U.S. mortgage servicers, federal regulators and the 50 states' attorneys general, over "robo-signing," other questionable foreclosure practices, and mortgage loan servicing practices.
In his 2012 Outlook report for U.S. banks, Credit Suisse analyst Moshe Orenbuch on Monday estimated that Citigroup faces potential foreclosure settlement costs ranging from $967 million to $1.6 billion, while for Bank of America, the analyst estimates settlement costs ranging from $5.6 billion to $9.4 billion.
Orenbuch called Citigroup and
his "top picks for 2012," but the analyst also has an "Outperform" rating for Bank of America. Both companies were also included among
For Citigroup, Orenbuch's 12-month price target of $48 implies 74% upside from Thursday's market close.
Interested in more on Citigroup? See TheStreet Ratings' report card for
For JPMorgan, the Credit Suisse price target is $52, implying 55% upside from Thursday's closing price of $33.48. The shares rose 4% on Thursday
For Bank of America, Orenbuch has a price target of $11, which would be a tidy 100% return. The market discounts the shares so heavily, not only because of the bank's legacy mortgage risk from its
in 2008, including the
, but from a lingering concern over capital adequacy, in the face of
and the Basel III enhanced capital requirements.
Then again, Bank of America estimates its regulatory
from its issuance of common shares and retirement of preferred shares and long-term debt.
Interested in more on Bank of America? See TheStreet Ratings' report card for
Getting back to JPMorgan, the shares were cheaply priced at Wednesday's close, trading just below tangible book value, and for 6.6 times the consensus 2012 earnings estimate of $4.87 a share, among analysts polled by FactSet.
Orenbuch said that JPMorgan was "competitively positioned to gain market share," and that he continued to recommend the shares "due to strength and stability of senior leadership team and strong balance sheet," adding that the company was "positioned with capital flexibility, which should support growth over time," and that he saw "increased capital deployment activities in the form of higher dividends and share buyback as a positive catalyst."
Interested in more on JPMorgan Chase? See TheStreet Ratings' report card for
First Horizon National
was another big winner on Thursday, with shares up 6% to close at $8.25.
JPMorgan analyst Steven Alexopoulos on Thursday called the Memphis, Tenn., lender his
among small and mid-cap U.S. banks, while raising his price target for the shares to $10 from $8.50, saying that a recent meeting with First Horizon CEO Bryan Jordan left him "feeling better" about the company's prospects.
Alexopoulos estimates that First Horizon will earn 58 cents a share in 2011, and eventually achieve normalized EPS of "$1.40+."
Interested in more on First Horizon? See TheStreet Ratings' report card for
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Written by Philip van Doorn in Jupiter, Fla.
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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 TheStreet.com 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.