"We see this as a compelling buying opportunity for a bank that, in our view, has better earnings visibility than most of its peers (largely thanks to acquisitions and relative strength of its Southeast markets) and low credit risk (energy exposure is minimal)," the firm said in a note.
Due to volatility in the market, BB&T stocks are down 16% from recent highs, BMO says. Meanwhile, its forward P/E lowered to 11.3x, which is "a discount" compared to the 11.9x regional bank peer median.
In the first quarter of 2016, cost savings are expected. The company also is on track for low- to mid-single-digit organic loan growth, mostly because of its Southeast markets and specialty businesses.
BMO also upgraded BB&T because the bank has little energy exposure and is thus not affected by energy prices.
Shares of BB&T were up 1.52% at $35.32 in early afternoon trading on Wednesday.
Separately, TheStreet Ratings team rates BB&T CORP as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
"We rate BB&T CORP (BBT) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, increase in net income, good cash flow from operations and expanding profit margins. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- BBT's revenue growth has slightly outpaced the industry average of 2.8%. Since the same quarter one year prior, revenues slightly increased by 1.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- After a year of stock price fluctuations, the net result is that BBT's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Commercial Banks industry average. The net income increased by 6.5% when compared to the same quarter one year prior, going from $461.00 million to $491.00 million.
- Net operating cash flow has significantly increased by 156.73% to $629.00 million when compared to the same quarter last year. Despite an increase in cash flow of 156.73%, BB&T CORP is still growing at a significantly lower rate than the industry average of 631.13%.
- The gross profit margin for BB&T CORP is currently very high, coming in at 89.19%. Regardless of BBT's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 19.37% trails the industry average.
- You can view the full analysis from the report here: BBT Ratings Report