On Thursday afternoon, shares of Bank of America were up 0.4%, or 3 cents, to $8.05. Wells Fargo (WFC) continued to rally, with shares up 2.5%, or 76 cents, to $31.17. Wells Fargo shares are approaching their 52-week high above $32. Citi shares were up 1.6%, or 53 cents, to $33.76.
While cheap on tangible book value, the names that have rallied may not be the ones to own. Frederick Cannon, director of research at Keefe Bruyette & Woods, tells Barrons.com that the best stocks will improve earnings this year, and the rally in some bank stocks:
“is about what is happening in Europe, a global risk-on trade, and banks hard hit last year that lost earnings power … We donÂt think everything in future earnings that banks gave up last year is recouped this year. We favor higher-quality names, the ones that trade with a higher tangible book value.”
KBW is overweight JPMorgan Chase (JPM) with a price target of $52, and U.S. Bancorp (USB) with a price target of $35.Â The firm has a market weight rating on Bank of America, with a target price of $9, and a market weight rating on Citi, with a target price of $42.
Shares of JPMorgan were up 1%, or 42 cents, to $40.38, while U.S. Bancorp shares rose 1.3%, or 38 cents, to $29.02
Bank of America CEO Brian Moynihan said at an investor presentation Thursday that the mortgage foreclosure mess “is healing.” According to Dow Jones newswires, Moynihan said BAC’s settlement over mortgage practices was “very good” for customers and the banking system. He also said that a focus on clients rather than products is “not only an attitude change,” but admitted the company must now “show the earnings progress.”