Wells Fargo's Mike Mayo advises investors to maintain their positions in major banks, citing favorable conditions post-election. He upgraded Morgan Stanley and Comerica from underweight to equal weight, reflecting a positive outlook for the banking sector.
Mayo has raised price targets for various large-cap banking stocks. Citigroup (C, Financial) received an increased target from $85 to $95, Bank of America (BAC) saw a rise from $52 to $56, Goldman Sachs (GS) moved from $600 to $680, and JPMorgan Chase (JPM) went from $240 to $270.
Mayo anticipates a "regulatory paradigm shift" over the next 15 years following the election and expects upward movement in EPS valuations. He projects more flexibility in capital returns and allocations, alongside a resurgence in bank mergers.
The rating upgrade for Morgan Stanley to equal weight reflects an optimistic view of capital market income expectations post-election. Mayo highlighted Morgan Stanley as a key global player in capital markets and expects it to benefit from a rebound in market activities, despite recommending Goldman Sachs as a purer trade in this regard.
Comerica's rating was also elevated to equal weight, with Mayo citing potential improvements in loan growth prospects and regulatory changes post-election as driving factors. He believes that an improved consolidation environment will benefit Comerica shareholders.
