JP Morgan and Bank of America shares rise on upgrade

Shares of JP Morgan Chase and Bank of America climbed early on Thursday after Deutsche Bank upgraded both, saying bank stock performance is about to get better after lagging amid pandemic-induced revenue concerns due to low interest rates and weak loan growth, along with credit worries.

“At this point, a further meaningful lag seems unlikely and there’s an argument to be made that bank stocks should catch up a bit versus the broader market,” analyst Matt O’Connor wrote in a note. He raised both stocks to buy from hold, citing a more-than 40 per cent gap so far this year between banks and the broader market.

Recovery

His positive view on bank stocks also “reflects more confidence in a continued macro recovery”, Mr O’Connor said. He added that there’s a “good chance” the bulk of banks’ loan loss reserve building is done, and noted capital markets and mortgage revenue are both strong, while fees from service charges, card income and investment and brokerage continue to rebound.

JP Morgan rose 3.3 per cent in early trading, reaching the highest since mid-August; BofA climbed 3 per cent.

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In a separate note, Citigroup analyst Keith Horowitz wrote that he came away from an investor call with BofA chief executive Brian Moynihan "more upbeat about the broader macro outlook with respect to BofA's business model and credit quality outlook."

– Bloomberg