Big Banks To Report Q1 Earnings: Analyst Prefers Bank Of America, 'Citi Likely To Lag'

Author: Surbhi Jain | April 03, 2024 01:13pm

As the big banks prepare for the first-quarter (Q1) earnings season, investors are eager to decipher potential market movements and individual bank performances. Analyst Vivek Juneja from JPMorgan provides valuable insights into the dynamics at play.

Bank of America – Standout Performer

Bank of America (NASDAQ:BAC) emerges as a standout performer in Juneja’s analysis. He expects the bank to benefit from robust investment banking fees, solid trading revenues, and strong wealth management fees.

Bank of America holds a place in JPMorgan’s ‘Positive Catalyst Watch’ list into Q1 earnings, with Net Interest Income (NII) outlook being a pivotal factor.

• Rating: Overweight
• Price Target: Raised from $35.00 to $39.50.

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Citigroup – Potential Challenges Ahead

In contrast, Citigroup Inc. (NYSE:C) faces potential challenges ahead. Juneja suggests that “Citi is likely to lag peers in trading, and have a noisy quarter”, hampered by large severance charges and the impact of Argentina’s devaluation.

Moreover, the bank continues to grapple with a rise in credit losses and regulatory concerns. Despite some strengths in businesses like Treasury services and FICC trading, Juneja rates Citigroup as Neutral.

• Rating: Neutral
• Price Target: Raised from $57 to $64.

Wells Fargo – Cautious Outlook

Wells Fargo (NYSE:WFC) presents a cautious outlook in Juneja’s analysis. While the bank shows strong growth in investment banking, trading revenue growth is expected to slow.

Furthermore, lingering uncertainty surrounds Wells Fargo’s earnings outlook. However, the bank’s valuation is considered appropriate versus peers.

• Rating: Neutral
• Price Target: Raised from $51.50 to $59.

As for the regional banks, “Truist and Citizens should benefit more from strong investment banking, tempered by continued NII pressures,” Juneja said.

Juneja rates Truist Financial Corp (NYSE:TFC) stock Neutral with a price target of $39.50.

Citizens Financial Group (NYSE:CFG) stock is also rated Neutral with a price target of $36.50.

As investors navigate the complexities of the banking sector in Q1 earnings, Juneja’s insights offer valuable guidance. Bank of America emerges as the preferred choice among large banks, poised for growth amidst favorable market conditions, while Citigroup faces challenges, and Wells Fargo’s outlook remains cautious.

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Posted In: BAC C CFG TFC WFC