NEW YORK (TheStreet) -- Shares of Citigroup (C) are gaining by 0.65% to $57.01 in Tuesday's afternoon trading session after analysts at Bernstein predicted a bull market for U.S. bank stocks, The Wall Street Journal reports.
The firm cited several reasons for the positive outlook.
Banks will hold up well if rates increase, "given market expectations regarding their asset sensitivity." Also, unlike rival sectors, profit margins at banks are not at their peak, the firm noted.
The firm did admit that banks are no longer the profit engines of the past, a result of regulation and compliance, but there is room for improvement for profit.
Lastly, large-cap bank stocks are trading at 12.4x forward earnings, in line with historical averages of 12.2x forward earnings.
Along with Citigroup, JPMorgan (JPM) was one of Bernstein's two best picks, thanks to a combination of low valuations, trading exposure and dividend yields.
Separately, TheStreet Ratings team rates CITIGROUP INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate CITIGROUP INC (C) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its increase in net income, expanding profit margins, solid stock price performance and growth in earnings per share. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity."