|JPMorgan is the clear favorite of analysts among big banks.|
NEW YORK ( TheStreet) -- Analysts who follow the six U.S. megabanks have grown increasingly negative on the sector during the past month despite widespread optimism about first-quarter earnings, which will kick off Friday when JPMorgan Chase ( JPM) reports ahead of the market open. Bloomberg data show analyst sentiment on a particular stock using a numeric system from one to five. A stock that has a rating of five has a "buy" recommendation from every analyst that follows it, while a stock with a rating of one has a unanimous "sell" from Wall Street. Thus JPMorgan, with a Bloomberg rating of 4.70, is the stock most favored by analysts among the six U.S. banks with more than $500 billion in assets, while Bank of America ( BAC), with a rating of 3.26, is the least favorite.
As is always the case with "buy" and "sell" recommendations, Bloomberg's rating system takes into account the market price for a stock as well as the earnings potential for the company in question. So while analysts may think JPMorgan is a great company, the 4.70 rating above all means they think the stock is inexpensive relative to other stocks in the sector. Bloomberg also tracks the change in analyst sentiment on a stock over various periods of time, and this is where the increasing negativity shows up. During the past month, only Wells Fargo ( WFC) has seen an uptick in analyst sentiment, by 0.04 to 4.39. By contrast, the other five big banks have all seen analysts collectively ratchet down their ratings. Sentiment on Goldman Sachs ( GS) has fallen by 0.02 to 3.72, while Morgan Stanley ( MS) has dropped by 0.08 to 3.47. JPMorgan's 4.70 rating was higher by 0.04 a month ago, while Bank of America and Citigroup ( C) have fallen by 0.22 to 3.26 and 0.13 to 4.06, respectively. Analysts' increased bearishness may in large part be attributed to the rally in bank stocks in 2012. Through Tuesday, all the big banks have scored double-digit percentage gains in their share prices so far this year, led by Bank of America, which is up 53.79%. Even Morgan Stanley, the weakest performer, has seen its shares rally 14.72%, handily outpacing the S&P 500, which is up by just over 9%. -- Written by Dan Freed in New York. Follow me on Twitter