JPMorgan adds a bank to the list of best stocks and subtracts one
JPMorgan has released its monthly list of its analysts’ best stock ideas.
These companies have been added to the list:
· Therapeutic Akero (AKRO) – Get the report from Akero Therapeutics Inc.a biotechnology company;
· carpenter technology (SCR) – Get the Carpenter Technology Corporation report, a steelmaker; and
· Financial Regions (RF) – Get the Regions Finance Corporation Reporta bank.
These stocks have been removed from the list:
· Everywhere Real Estate (HOUS) – Report Get Anywhere Real Estate Inc.real estate services company, and,
· Signature Bank (SBNY) – Get the Signature Bank Reporta bank.
For Akero, “current levels imply overly conservative expectations…for its lead drug candidate NASH,” JPMorgan analysts wrote in a commentary. NASH stands for non-alcoholic steatohepatitis, an advanced form of non-alcoholic fatty liver disease.
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Carpenter Technology is “leveraged for the aerospace recovery and has set a path for earnings to reach previous peak rates over the next four quarters,” the analysts said. “We believe execution along these lines will result in a revaluation of the stock.”
Regions Financial is “better positioned for net interest income growth, due to higher excess liquidity and more conservative deposit assumptions than its peers,” the analysts said.
“It is also less dependent on market-related revenue, which is under pressure, and has done a good job of managing hedges to protect net interest margin.” Margin is the difference between what a bank takes on loans and pays on deposits.
Removed from list
Regarding Anywhere Real Estate, the investment firm said the housing downturn is a “near-term headwind” that could hurt the company’s profits. But JPMorgan maintained its overweight rating on the stock.
Signature Bank “lowered its forecast for quarterly loan and securities growth from a quarterly range of $4 billion to $7 billion to a quarterly range of $1 billion to $3 billion for the third and fourth quarters of 2022 “, said the analysts. JPMorgan also notes the overweighting of Signature Bank.
Morningstar’s take on regions
Morningstar analyst Eric Compton attributes no moat to the company and puts the stock’s fair value at $21. It recently traded at $21.33.
“While most of the banks we cover reported steady or slight declines in fee income, this [second] quarter, the regions bucked the trend,” he wrote in a comment. It saw expense growth of 10% quarter-over-quarter and 3% year-over-year.
“The recent acquisitions of Sabal Capital Partners and Clearsight Advisors are helping to provide some growth in capital markets, which rebounded even better in the second quarter than management had initially hoped,” Compton said.
“Regions also grew its wealth management revenue, which was a cut above what most of its peers were able to do in the quarter.”
Admittedly, “the updated expense guidance for the remainder of the year implies a slightly worse outlook than that announced by management last quarter.”