Last Friday, Wells Fargo (WFC), JP Morgan (JPM), and Citigroup (C) posted quarterly results. WFC stock fell the most, which increased the investor’s interest in the other two banks instead.
Investors sold Wells Fargo shares after expressing disappointment in the company’s 2024 outlook. It did not increase its net interest income guidance. Instead, it priced in a forecast for the Federal Reserve cutting interest rates in the second half of the year.
Markets cannot penalize WFC stock while expecting rate cuts to lift stock markets. Instead, the bank is more attractive at lower prices. It may revise its NII forecast if the Fed ends up keeping rates at over 5%.
JP Morgan should find buying support at over $200. The stock’s valuation is stretched, especially after it set aside more money for potential credit losses. PCL was $3.05 billion, higher than the markets expected. For the year, the bank expects full-year net interest income of $91 billion.
Citi has strong prospects ahead. As a result, the stock is unlikely to dip to give investors a chance to buy more shares.
In the second quarter, Citi posted revenue of $20.14 billion and an EPS of $1.52. Deposits topped $1.28 trillion. With a strong NII ahead, C stock is undervalued.
