Could Big Banks See Big Upside in 2013? (C, BAC, JPM)
Big Banks have seen their share of decline in the last couple years, but could 2013 be the year of a real recovery for the financial industry?
National banks including Bank of America (BAC), J.P. Morgan (JPM), and Citigroup (C) have surely taken a hit since the financial crisis in 2008. Since the sharp decline following the crisis, these stocks have been having a rough time recovering from their losses. However, many analysts see upside in 2013 for these stocks.
Bank of America (BAC)
In 2012, investors saw Bank of America’s stock price increase by 114% from its price of less than $6 a year ago. For 2013, BAC is optimistic about its growth, predicting an upside to the U.S. housing recovery and growth in the country’s economy.
Although the majority of analysts see BAC as a “Hold,” both J.P. Morgan and Meredith Whitney have both issued “Buy” ratings for the company. Meredith Whitney even stated that BAC was a “great investment opportunity.”
The company more than doubled its stock price in 2012, and there is a good possibility that they could do it again in 2013.
Last year may have been BAC’s year, but many analysts see Citigroup having a major recovery in 2013. The company certainly has had its troubles in 2012; BAC laid off 11,000 employees, faced a $1 billion lawsuit involving fraud, and saw their former CEO Vikram Pandit resign. Despite such an eventful year, the company’s stock price is still up over 55% from a year ago.
Two major firms have recently upgrade Citigroup, including Morgan Stanley, who increased their rating on the company from an “Equalweight” to an “Overweight,” and Meredith Whitney, who issued an upgrade from a “Hold” to a “Buy.”
Additionally, 15 analysts from TheStreet rated Citigroup as a “Strong Buy,” while 3 other analysts see the stock as a “Moderate Buy.”
JPMorgan Chase (JPM)
J.P. Morgan also saw its share of ups and downs in 2012. The company took on a $17.5 billion loss from a bad trade in May, and was faced with lawsuits from the government. However, JPM still has a 34% upside from its stock price a year ago.
Looking ahead, many analysts see JPM doing even better in 2013. According to The Street, 17 analysts rate JPM as a “Buy.”
These stock prices are not strictly on fundamentals. The Federal Reserve has paid these institutions stimulus money to help them during the rough patch in the financial services industry. However, this stimulus money only guaranteed if the U.S unemployment rate remains above 6.5%.
Regardless of the stimulus money from the Federal Reserve, these banks, along with other members of the financial services industry must continue to compete in a tough market. This year will be the year where banks begin to really embrace new banking regulations set up by the government, and start to make strategic plans to succeed.
The Bottom Line
All three of these banks have fluctuated in 2012, but each of them managed to end 2012 with an upside from the year before. Banks have certainly seen their share of bad press and scandals the last few years, but some analysts see 2013 as a possible year of positivity for these banks and their stocks.
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