4 Big-Cap Bank Stocks Hit With Bearish Brokerage Notes

The financial sector has had a strong week

Karee Venema
Jun 8, 2018 at 9:59 AM
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Bank stocks have had a big week, as reports the European Central Bank (ECB) could begin unwinding its bond-buying program boosted the 10-year Treasury yield. Nevertheless, HSBC cut its price target on a number of big-cap financial names overnight, including Citigroup Inc (NYSE:C), Goldman Sachs Group Inc (NYSE:GS), JPMorgan Chase & Co. (NYSE:JPM), and Morgan Stanley (NYSE:MS).

Most Analysts are Upbeat on Citigroup Stock

On Citigroup stock, for instance, the brokerage firm trimmed its price target to $83 from $85. This still represents expected upside of 22% to last night's close, and sits in territory not charted since December 2008.

C shares have been in a channel of lower highs and lows since topping out north of $80 in late January, and have been churning beneath their 200-day moving average since the end of March. Today, C stock is down 0.4% at $68.18, and is off 8.4% in 2018. Most analysts are upbeat, though, with 12 of 18 maintaining a "buy" rating.

Goldman Sachs Call Buying Hot

For Goldman Sachs, HSBC slashed the stock's price target to $243 from $272. The shares have rallied this week off their year-to-date lows near $224, but have run headlong into familiar resistance at their 10- and 20-day moving averages. At last check, GS stock was off 0.1% at $233.15, and has shed 8.5% so far in 2018.

Options traders have kept the faith in the bank stock. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), Goldman Sachs stock's 10-day call/put volume ratio of 2.84 ranks in the 89th annual percentile, meaning calls have been bought to open over puts at a quicker-than-usual clip.

JPMorgan Chase Stock Finds Key Technical Support

HSBC lowered its JPMorgan Chase price target to $107 from $111 -- a slight discount to Thursday's close. The stock has been trending lower since its late-February record high of $119.33, but took a sharp bounce off its 200-day moving average two weeks ago. This morning, JPM stock is down 0.2% at $110.62, holding onto a 3.4% year-to-date gain.

Analysts are split on the Dow stock, however, with nine rating JPM a "buy," and the other nine giving a tepid "hold" suggestion. Plus, the consensus 12-month price target of $121.93 is a 10% premium to the equity's current perch.

Short Sellers Turn Up the Heat on Morgan Stanley Stock

Lastly, HSBC cut its price target on MS to $58 from $60. Although the shares are set to end today with a weekly gain -- up 1.6% at last check -- they are down 0.1% today at $52.00, on track to close below their 40-week moving average for the second straight week, which hasn't happened since mid-2016.

Short sellers have been ramping up their exposure to the big-cap bank stock, which is just off its year-to-date breakeven point. Short interest on Morgan Stanley stock shot up 55% in the two most recent reporting periods to 14.97 million shares -- the most since December. This represents just 1.2% of MS stock's available float, though, and wouldn't even take two days to cover, at the average pace of trading.


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