Will 2013 Be a Boon for Banks?

  Google+  Twitter | + More Articles
  • Like on Facebook
  • Share on Google+
  • Share on LinkedIn

“We have great earnings power,” Brian Moynihan told CNBC’s Maria Bartiromo at January’s World Economic Forum in Davos, Switzerland, explaining why Bank of America’s (NYSE:BAC) stock was up over 100 percent in 2012.

It’s an opinion shared by Guggenheim Securities analyst Marty Mosby, who believes that both Bank of America and Citigroup (NYSE:C) “represent more than 30% upside potential” this year. A research note seen by TheStreet expounds on his expectations for the two banks. For Bank of America, Mosby forecast a return on tangible common equity (ROTCE) of 8.1 percent, with a cost of equity of 12.9 percent. He expects a ROTCE of 8.8 percent for Citigroup, setting its cost of equity at 13.2 percent.

Your 1 Feature Stock Pick for February is hot off the press. Click here to discover it now!

Bank of America and Citigroup are the only two large-capitalization banks covered by Guggenheim that are still trading below tangible book value, meaning their stocks are underpriced. Book value refers to a company’s total assets minus its liabilities. Mosby has a “buy” rating on both companies and expects them to trade above their book values by the end of the year. On Tuesday he lifted his price target on shares of Bank of America to $15 from $14, and raised his target for Citigroup to $57 from $55…

More Articles About:

To contact the reporter on this story: staff.writers@wallstcheatsheet.com To contact the editor responsible for this story: editors@wallstcheatsheet.com

Yahoo Finance, Harvard Business Review, Market Watch, The Wall St. Journal, Financial Times, CNN Money, Fox Business