Benzinga - by Aditi Ganguly, Benzinga Staff Writer.
Rising interest rates and the collapse of Silicon Valley Bank caused bank stocks to plummet earlier this year as financial institutions grappled with the consequences of the global credit crunch.
But as the Federal Reserve gradually assuages its hawkish policies, banking institutions have been boasting a steady recovery. Renowned financial institutions capitalized on the banking crisis to acquire struggling small and mid-sized institutions, raking in profits.
JPMorgan
JPMorgan Chase & Co. (NYSE:JPM), the world's largest financial institution in terms of market cap, is one of the most promising large-cap banking stocks. Up more than 15% over the past year, JPMorgan has benefitted from the rising interest rates, boosting its interest income.In the third quarter, JPMorgan's revenue increased 21% year over year to $40.69 billion, while profit rose 35% from the same period last year to $13.15 billion. JPMorgan CEO Jamie Dimon also acknowledged the "below normal credit costs" to be one of the driving factors raising its profit margins in the last reported quarter.
The markets have a positive outlook for JPMorgan, with analysts from Oppenheimer & Co. Inc., Morgan Stanley and Piper Sandler maintaining an Outperform or Overweight rating on the stock. Oppenheimer also has a price target of $60.67 on JPMorgan, indicating a potential upside of over 60%. Morgan Stanley, on the other hand, has maintained a price target of $191, reflecting a nearly 32% upside.
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Citigroup
Citigroup Inc. (NYSE:C) is one of the largest multinational financial institutions in the world with a market presence in 160 countries. Despite being one of the world's most renowned banks, Citigroup stock has had a tough year, plunging by nearly 14%.It is one of the most popular dividend stocks as well, yielding approximately 5.5% on the current price. The bank became the first issuing and paying agent for digitally native note issuance for the World Bank, potentially transforming "the way in which the debt capital markets operate," according to Andrew Mulley, Europe, Middle East and Africa (EMEA) head of Citi’s issuer services.
U.S.-based Oppenheimer Holdings Inc., a leading investment bank with over $35 billion in assets under management, has an Outperform rating on Citigroup stock, with a price target of $82. This indicates a 105% potential upside for Citigroup stock. BMO Capital Markets also has a similar rating, with a price target of $66, which reflects an up to 65% upside.
BlackRock
Analysts are currently bullish on BlackRock Inc. (NYSE:BLK), the world's largest asset manager. The firm seems to be on the verge of gaining approval from the U.S. Securities and Exchange Commission for its flagship spot Bitcoin ETF, which could potentially revolutionize crypto investments.This comes after BlackRock obtained a Committee on Uniform Security Identification Procedures (CUSIP) number for the exchange-traded fund (ETF), which "happens when ETFs are preparing to launch," Bloomberg senior ETF analyst Eric Balchunas said. As Bitcoin recovers after a brutal crypto winter, this new ETF could generate billions in revenue for BlackRock.
The firm's steady growth in the last quarter has also generated market enthusiasm, as its total assets under management (AUM) rose 14%, or by $1.1 trillion year over year, to $9.1 trillion in the third quarter of 2022. BlackRock's diluted earnings also rose by nearly 15% from the same period last year to $10.66 per share.
"At BlackRock, we are more connected with our clients than ever before, and I'm proud that clients have entrusted us with $307 billion of net inflows over the last 12 months, contributing to a $1.1 trillion increase in AUM," BlackRock CEO Larry Fink stated in the latest earnings release. "The long-term trend of clients consolidating more of their portfolios with BlackRock is only accelerating, and underlying business momentum remains strong."
Both Morgan Stanley and JPMorgan have assigned an Overweight rating on BlackRock stock, as they expect it to outperform the broader markets. Morgan Stanley has a price target of $897, reflecting a 44% potential upside. JPMorgan has issued a price target of $708, which indicates a 13.7% upside potential.
Goldman Sachs
Goldman Sachs Group Inc. (NYSE:GS), one of the world's most prominent investment banks, is poised to regain momentum soon. Goldman Sachs stock, which fell by nearly 13% so far this year, is slated to surge by nearly 50% in the near term, according to Oppenheimer and JMP Securities analysts.
Oppenheimer expects shares of Goldman Sachs to hit $447 in the near term, indicating a 49% potential upside. JMP Securities, which has a Market Outperform rating on the stock, issued a price target of $440, reflecting a 47.3% potential upside.
Goldman Sachs' recent foray into infrastructure assets could propel its growth, as the firm raised nearly $4 billion to create a new infrastructure fund.
"The infrastructure asset class is positioned to benefit from some of the most exciting secular tailwinds associated with decarbonization, digitization, deglobalization and demographics," said Scott Lebovitz, co-head of the Infrastructure department at Goldman Sachs Asset Management.
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