Sixty-seven U.S. banks and thrifts were trading at least 20% below analysts' consensus one-year price targets as of March 2 and 13 were more than 30% below the mark, according to S&P Global Market Intelligence data.
| About this analysis In this analysis, S&P Global Market Intelligence examined U.S. bank stocks trading in relation to analysts' consensus mean price targets as of March 2. Only stocks covered by at least three analysts and trading above $5 per share were included. In addition, only companies trading below analysts' mean 2022 price target and with a buy strength of 50% or more are shown, or companies trading above analyst's mean price target and with a buy strength below 50%, are shown. |
Phoenix-based Western Alliance Bancorp. had the largest implied upside in the U.S. banking industry at 45.1% as of March 2, and 12 of the 13 analysts covering the stock gave it the equivalent of a "buy" recommendation. Not far behind, Everett, Wash.-based Coastal Financial Corp. traded at a 43.2% implied upside, the second largest discount. All four analysts covering Coastal have a "buy" recommendation.
In third place, Carmel, Ind.-based Merchants Bancorp was trading 38.1% below its mean one-year price target and also boasts "buy" recommendations across the board from its three covering analysts.
On the other hand, 10 companies were trading above analysts' one-year price targets as of March 2, up from eight at the time of S&P Global Market Intelligence's last analysis in November 2021.
Warsaw, Ind.-based Lakeland Financial Corp. traded 7.1% above analysts' consensus mean one-year price target, the largest premium in the group. The company's shares have gained just 0.3% year-to-date and none of the analysts covering the bank currently have a buy recommendation.
Memphis, Tenn.-based First Horizon Corp. had the second-largest premium at 5.4% and its stock has returned 45.9% year-to-date thanks largely to Canada-based Toronto-Dominion Bank's Feb. 28 announcement that it would acquire First Horizon for $13.54 billion in cash.
Bank stocks faring better than the broader market in 2022
U.S. bank stocks have largely held their ground this year compared to the broader market as investors look to expected interest rate hikes as a positive earnings catalyst for the industry. While the S&P 500 has dropped 7.7% year-to-date through March 2, the US BMI Banks index was down just 1.6%. However, since March 2, 2021, the S&P 500 has returned 14.9%, 3.2 percentage points more than the US BMI Banks index.
