Benzinga
Published May 06, 2024 20:55
Updated May 06, 2024 22:10
JPMorgan's 'Magnificent Seven' — Bank Version: These Stock Picks Have 'Strong Upside Potential'
Benzinga - by Surbhi Jain, .
JPMorgan analyst Steven Alexopoulos has identified seven bank stocks poised for significant growth in the current market landscape. He’s referred to these picks as “our ‘Magnificent Seven'”.
JPMorgan’s Magnificent Seven Bank Stock Picks Alexopoulos’ picks from among mid- and small-cap banks, and his views (summarized) on them are as follows:
Also Read: Market Reaction To Bank Earnings Is Mixed, JPMorgan Analysts Project Further Decline In Net Interest Income
US Mid- And Small-Cap Banks’ Outlook For Alexopoulos, key takeaways from the quarter included: “NIMs trending flat, minimal loan and deposit growth being delivered, and credit quality trends remaining strong despite one-offs.” These should translate into improved loan growth trends in the second half of the year.
However, there are challenges on the horizon. Economic growth has been robust in recent years, but loan demand has remained limited.
Moreover, the timing for Fed rate cuts, which many banks were banking on for a significant uptick in growth, is now uncertain.
Recent inflation data has come in higher than expected, prompting the Fed to hold off on rate cuts until there is more confidence in the inflation trajectory.
“We believe the Fed may need to see several inflation readings trending more favorably before it considers lowering the funds rate,” said Alexopoulos.
Strong Upside Potential Despite these challenges, JPMorgan remains bullish on the sector, citing “strong upside potential” and low odds of negative catalysts such as rate hikes.
Alexopoulos views the “Magnificent Seven” picks as particularly well-positioned to drive significant intrinsic value growth in the current environment.
Read Next: Why Veteran Wall Street Investor Believes We’re Still In A Bull Market
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