Citigroup Analyst Downgrades Several Banks

Is now the time to buy shares in U.S. banks given their recent weakness that came on the heels of significant underperformance?

Citigroup analyst Keith Horowitz is telling clients to hold off for now, suggesting “we are very early in the credit cycle.” As a result, he has made substantial cuts to his estimates for the group, bringing Citigroup 6% below consensus.

The analyst downgraded a slew of U.S. financial service names on Monday in anticipation of flat to negative returns for the next several months.

Bank of America Corp.(BAC), First Horizon National Corp. (FHN), JPMorgan Chase & Co. (JPM), PNC Financial Services Group Inc. (PNC), Wachovia Corp. (WB), and Wells Fargo & Co. (WFC) were all cut to “hold” from “buy.”

Comerica Inc. (CMA), and M&T Bank Corp. (MTB) were cut to “sell” from “hold,” while Fifth Third Bancorp (FITB), KeyCorp. (KEY), National City Corp. (NCC), and SunTrust Banks Inc. (STI) were left at “hold.”

Mr. Horowitz said earnings per share estimates are being reset downward to reflect an increasingly challenging macro environment. It is difficult to make a compelling case that the banks are cheap given prior trough valuations and without clarity as to whether there has been a peak in non-performing assets, he added.