NEW YORK (
was the winner among the largest U.S. financial names on Thursday, with shares rising over 3% to close at $22.92.
The broad indexes recovered from earlier declines and ended mixed, after reports that the International Monetary Fund was preparing a rescue fund to assist Spain, if the country is unable to line up the money it needs to shore up
Back home, ADP announced that private U.S. companies created 133,000 jobs in May, short of the 148,000 expected by economists polled by Thomson Reuters. In April, U.S. companies created 119,000 jobs, according to ADP
The Labor Department reported that for the week ended May 26there were a seasonally-adjusted 383,000 initial jobless claims, ahead of the 370,000 expected by economists, and increasing from 373,000 the previous week.
KBW Bank Index
rose 1% to close at 44.08, with 21 out of 24 index components showing gains for the session.
SunTrust's shares have now returned 30% year-to-date, following a 40% decline during 2011.
The shares trade for 0.9 times their reported March 31 tangible book value of $25.49, and for nine times the consensus 2013 earnings estimate of $2.68 a share, among analysts polled by Thomson Reuters. The consensus 2012 EPS estimate is $1.91.
Wells Fargo analyst Matthew Burnell on Thursday upgraded his rating for SunTrust to "Outperform" from "Market Perform," with a valuation range of $23 to $25, saying the bank was "best positioned" in Wells Fargo's coverage universe to take advantage of President Obama's expanded Home Affordable Refinance Program, which allows borrowers with mortgages held by
to refinance their homes at today's historically low rates, even if the decline in property values over the past several years left their homes worth much less than the loan being refinanced.
Burnell added that the stock's multiple to tangible book value was "a 31% discount to its 5-year average despite having weathered a residential real estate depression in its Southeastern U.S. footprint and offering population growth 25% above the national average."
The analyst estimates that SunTrust will earn $1.85 a share during 2012, followed by earnings of $2.65 a share in 2013.
Interested in more on SunTrust? See TheStreet Ratings' report card for this stock.
Shares of Morgan Stanley rose 2% to close at $13.36 and Citigroup was also up 2% to close at $26.51, after Morgan Stanley said in a Securities and Exchange Commission filing on Thursday that it was advising Citigroup of its intention to exercise its right to buy an additional 14% of Morgan Stanley Smith Barney Holdings, for which Morgan Stanley currently holds a 51% stake, with Citi holding the other 49%.
The joint venture was established in June of 2009, with Citigroup selling Smith Barney, its Quilter wealth management business and its Australia private client networks to Morgan Stanley, in exchange for the 49% stake in the joint venture, as well as $2.75 billion in cash. Beginning in 2012, Morgan Stanley has the option to purchase Citi's remaining stake in the joint venture.
Credit Suisse analyst Howard Chen said that "the buy-in process should unfold sometime over the next three months and could happen sooner," and would incorporate "several appraisers and an additional step if both firm's valuation estimates are wide apart," adding that "if valuation comes in at the lower end of estimates and closer to MS carrying value, we would not rule out a greater than 14% buy-in."
Chen called Morgan Stanley's action "a potential win-win for both firms," with Morgan Stanley gaining "further scale and leadership in a large addressable market, an improved earnings/funding mix and potential purchase at a highly cyclically depressed point of the retail brokerage cycle," while Citigroup would see "material Basel III capital relief and improved likelihood of capital return over time."
Morgan Stanley's shares have now declined 11% year-to-date after falling 44% during 2011.
The shares trade for less than half their reported March 31 tangible book value of $27.37, and for less than six times the consensus 2013 earnings estimate of $2.31 a share. The consensus 2012 EPS estimate is $1.45.
Chen rates Morgan Stanley "Outperform," with a $17 price target, and estimates the company will earn $1.15 a share this year, followed by EPS of $2.20 in 2013.
Interested in more on Morgan Stanley? See TheStreet Ratings' report card for this stock.
Citigroup's shares have now returned 1% year-to-date, following a 44% decline in 2011.
Citigroup is similarly discounted to Morgan Stanley. The shares trade for just over half their tangible book value, according to Thomson Reuters Bank Insight, and for less than six time the consensus 2013 EPS estimate of $4.66. The consensus 2012 EPS estimate is $4.09.
Credit Suisse analyst Moshe Orenbuch rates Citigroup "Outperform," with a $48 price target, estimating the company will earn $4.25 a share this year, followed by earnings of $5.00 a share in 2013.
Interested in more on Citigroup? See TheStreet Ratings' report card for this stock.
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.