Jefferies turns bullish on 4 bank stocks after Q2 earnings beat

Jefferies turned bullish on four money center banks after all of them beat Q2 earnings estimates on record capital markets revenue.

"Results were largely positive, with all four banks beating EPS and PPNR expectations," the Jefferies team said in a note. Loan growth came in modestly above expectations while deposit trends remained stable, they added.

Bank of America reported core EPS and PPNR ahead of estimates, driven by investment banking and sales and trading strength. Management raised its full-year operating leverage guidance to 300 to 400 basis points from above 200 basis points previously. Return on tangible common equity reached 17%, above Jefferies' estimate of 16.1%. Jefferies set a $75 price target on the stock, which yields 1.89%. Berkshire Hathaway remains the largest institutional holder with 513.6 million shares.

Citigroup beat on stronger-than-expected net interest income, markets and investment bank results. The bank reiterated its full-year ROTCE guidance of 10% to 11% even as first-half ROTCE trended at 13%. Jefferies noted $5 billion of spending was pulled forward from 2027 and 2028 for US Card, growth and productivity initiatives. The firm assigned a $165 price target. The stock yields 1.64%.

Goldman Sachs posted record first-half results in both markets and advisory. Record equities revenue, all-time-high prime balances and accelerating large-cap M&A provided strong support. Jefferies raised its EPS estimates for the second half by 9% and for fiscal 2027 by 8%, with a $1,299 price target. The dividend yield stands at 1.47%.

Wells Fargo beat on strong fee income and continued expense discipline. Net interest margin compressed 4 basis points as expected, while better-than-expected average earning asset growth drove a modest NII beat. Investment banking deposit costs rose 9 basis points quarter over quarter. Jefferies set a $100 price target. The stock yields 2.11%.

The bullish calls come as the four banks benefit from surging trading revenue, rising investment banking fees and healthy loan growth. Net interest income across all banks remained healthy, supported by fixed-rate asset repricing and deposit growth. Investors will watch whether the Federal Reserve's rate path in the second half sustains the NII momentum and whether capital markets activity continues at the current pace.

This article is for informational purposes only and does not constitute investment advice.