(Bloomberg) - The “detour” is finally over for investors in bank stocks, said Wells Fargo & Co.’s Mike Mayo, after the group notched four-straight weeks of gains.
The analyst said problems dogging the trio of fallen US regional lenders earlier this year were idiosyncratic, and that he doesn’t expect any more banks in the S&P 500 to fail in the immediate-term. The sector’s stocks have shown hints of stabilization recently, with the KBW Bank Index fresh off a fourth week of gains.
“The detour for not owning bank stocks is over,” Mayo said Monday on Bloomberg Surveillance, flashing a bright orange “end detour” road sign to the cameras.
Mayo’s top picks include JPMorgan Chase & Co., Citigroup Inc. and US Bancorp, which all have an overweight rating at Wells Fargo. Mayo repeated his view that “Goliath is winning,” and called out US Bancorp as the stock’s been “relatively pummeled, given the quality.”
Bank stocks are swinging between gains and losses on Monday amid an industry conference. Still, Mayo noted the sector’s gains over the past four weeks, which outpaced the S&P 500 Index, as well as a recent comeback in bond sales.
“There’s over 4,500 banks. You’re going to have bank failures — that’s the rule of banking,” Mayo said. “It’s not going to be any bank in the S&P 500, in my view, over the immediate time-frame. So that phase is over.”
By Bre Bradham, Lisa Abramowicz and Tom Keene
