MW Bank stocks are suffering another bad week. These analysts aren't worried.

By Steve Gelsi

Bank stocks shed more red ink even as Baird analyst upgrades Bank of America and JPMorgan on valuation

Bank stocks moved into the red Friday to bring their losses for the week into the 10%-plus range as the February jobs report provided no lift and sector investors took their queues from the U.S. government-debt market.

Investors mostly brushed aside upgrades of $Bank of America Corp(BAC-N)$. and JPMorgan Chase & Co. by Baird analyst David A. George, who said it may be time to wade into some names.

As yields on the 10-year Treasury BX:TMUBMUSD10Y fell and prices of government debt rose, bank-stock prices have continued to weaken.

As yields drop, banks are under more pressure to cut the interest they charge for mortgages and other loans. It's also been a signal to sell cyclical stocks such as banks, said Truist analyst Brian Foran.

"Lower rates plus a flatter [yield] curve and wider credit spreads equals sell cyclicals," Foran said.

Banks are also facing more uncertainty tied to tariffs and other changes in Washington, D.C., as corporations and private-equity firms tap the brakes on dealmaking until some of the dust settles.

"It wasn't obvious banks were going the biggest losers from trade wars, and guidance updates this week were benign," Foran said. "There is still a lot of uncertainty."

Also read: Private-equity buyout activity slows down in a troubling sign for investment banks

The last seven days marked the third "brutal" week in a row for bank stocks, he said.

Meanwhile, Baird analyst George upgraded Bank of America's stock to outperform from neutral.

"We have always been fans of the BAC franchise given its best-in-class deposit franchise, consistent execution, relatively low credit risk, and top-tier markets businesses, but felt the valuation didn't make sense - we think it does now with the stock in the low $40s," George said in a research note.

George also upgraded JPMorgan Chase's stock to neutral from underperform.

"We aren't buyers of the stock but don't believe it makes sense to be short, as defensive-minded market participants will likely move into JPM if economic data gets a little more volatile," George said. "JPM is very well-positioned to take market share throughout its businesses while expanding margins and returns, and its enviable capital position gives the company ultimate flexibility to invest and return capital to the extent it makes economic sense."

Baird also upgraded Huntington Bancshares Inc.'s stock $(HBAN)$ to outperform from neutral, calling the company a "high-quality regional" bank.

$Citigroup Inc(C-N)$.'s stock (C) is down 13.7% on the week and 17.5% in the past month.

Morgan Stanley's stock $(MS)$ has fallen 12.5% in the past week including a 2.4% drop on Friday. It's down nearly 17% in the past month.

JPMorgan's stock $(JPM)$ has fallen nearly 9% in the past week, while Bank of America's stock $(BAC.SI)$ is down about 11.4% over the same time period.

Wells Fargo & Co.'s stock $(WFC)$ has fallen 11.9% this week, including a 5% drop on Friday. Goldman Sachs Group Inc. $(GS)$ has lost about 11.6% of its value this week, including a drop of 3.1% on Friday.

The broad banking sector fell this week as well, with the KBW Nasdaq Bank Index BKX down 10.7% on the week including a 2.6% drop on Friday.

-Steve Gelsi

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March 07, 2025 12:07 ET (17:07 GMT)

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