NEW YORK (
issued a second quarter earnings wrap report on Wednesday and listed its top picks based on its return expectations and current valuations.
Analyst Jason Goldberg noted that it was a strong quarter in terms of how banks have fared so far versus consensus earnings expectations. "Of the 22 banks under coverage included in this report, 21 met or exceeded 2Q11 consensus EPS expectations (TCB missed in 2Q11). This is our 65th earnings season on the sell-side covering bank stocks. The best quarter was 3Q97 when only 2 of our 48 banks under coverage missed," he wrote.
In the third quarter, the analyst expects net interest income to benefit from an extra day in the calendar, loan growth to accelerate, seasonally weak trading revenues and continuing improvements in asset quality.
The list of concerns that weigh on bank stocks keep growing, but Barclays groups them into largely four buckets: fundamental, economic, regulatory and sovereign. "To the extent there is progress on these fronts in the back half of the year, given where valuations are and how under-owned the group feels, it could give the stocks a meaningful lift," Goldberg said. "Still, the U.S. economy probably matters most," he added.
6. JPMorgan Chase
Barclays raised the bank's 2011 and 2012 EPS estimates to $5.05 and $5.65 respectively. The stock has a price target of $60. It closed Wednesday at $40.67.
Barclays raised its 2011 earnings estimates for $4.05 a share from $3.99 per share but lowered the 2012 EPS estimate to $5.50 from $5.94. It cut its price target for the stock to $55. Shares closed Wednesday at $38.27.
4. U.S. Bancorp
Barclays forecasts a 2011 EPS of $ 2.25 and 2012 EPS of $2.65. The stock's price target has been raised to $33 from $31. Shares closed at $26.74
3. Wells Fargo
The 2011 EPS estimate was maintained at $2.85, while the 2012 EPS estimate was upped to $3.45. Barclays also raised the price target on the stock to $38. The stock last closed at $28.70.
2. PNC Financial Services
The analysts raised estimates for 2011 earnings to $6.25 per share, while lowering 2012 estimates slightly to $6.30 per share. The price target was maintained at $75. Shares closed at $54.50
1. Bank of New York Mellon
Analysts cut price target to $35 from $38. Shares closed at $24.94.
--Written by Shanthi Bharatwaj in New York
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