Bank of America will double to $60, says veteran banks analyst

Veteran banks analyst Richard Bove, discusses Q2 earnings for the US banking sector with IGTV.

Second quarter (Q2) earnings season for the US banking sector is in full swing, with a mixed set of results so far. Here is a round-up of the banks’ Q2 scorecards to date.

JPMorgan

JPMorgan shares closed higher on Friday after reporting a beat on the top and bottom line. Revenue increased 6.5% to $28.39 billion. The bank saw Q2 profit jump 18% to hit a record $8.32 billion.

Revenues in its trading division was a bright spot, rising 13% to hit $5.4 billion and soaring past expectations. CEO, Jamie Dimon, said ‘we see good global economic growth, particularly in the US, where consumer and business sentiment is high’. Dick Bove, veteran banks analyst and chief strategist at Hilton Capital Management, told IGTV that the numbers were superb.

Citigroup

Citigroup’s Q2 revenue came in at $18.47 billion, below expectations at $18.51 billion. Net income per share hit $1.63, ahead of Thomson Reuters I/B/E/S expectations for $1.56 and up from $1.28 in the same period last year.

Shares closed Friday’s session lower on the back of disappointing numbers, and the stock has sharply underperformed the wider sector year-to-date. Bove described the Citigroup results as mediocre. He said the company is ‘making a lot of mistakes’ and the stock ‘should be avoided’. He argued that Citigroup could be the most impacted by trade tensions between the US and China because ‘at one point Citigroup claimed itself to be the biggest trade finance company in the world’.

Bank of America

Shares in Bank of America (BoA) jumped after it reported revenues of $22.6 billion, topping estimates. Fixed income, currencies and commodities (FICC) trading revenue hit $2.29 billion, also ahead of forecasts.

Adjusted earnings per share (EPS) hit 64 cents, beating Bloomberg’s forecast for 57 cents. Bove said BoA is his favourite stock in the sector, and has the potential to rise to $60 a share. He also added that chief executive Brian Moynihan ‘has proven to be an expert CEO’.

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This information has been prepared by IG, a trading name of IG Markets Limited and IG Markets South Africa Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. International accounts are offered by IG Markets Limited in the UK (FCA Number 195355), a juristic representative of IG Markets South Africa Limited (FSP No 41393). South African residents are required to obtain the necessary tax clearance certificates in line with their foreign investment allowance and may not use credit or debit cards to fund their international account.

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