- Noting Bank of America's (BAC -0.9%) capital ratio in the Fed stress test was the lowest of any bank which passed, Atlantic Equities pulls its Overweight rating on the stock, and cuts the price target to $18.50 from $20. The stress test, says analyst Richard Staite, shows BofA with a $13B buffer over the minimum requirement, meaning maybe just $5B in buybacks and $2.5B dividends this year, "although we are somewhat nervous that it or another bank could be failed on a qualitative basis."
- Still, Staite expects a boost in the quarterly payout to $0.06 per share from a penny.
- Staite and team upgrade U.S. Bancorp (USB +0.7%) and Wells Fargo (WFC -0.4%) to Neutral from Underweight, citing the large margins by which they passed the stress test.
- In other financial sector moves, Sterne Agee boosts First Interstate BancSystem (FIBK +6%) to a Buy, citing the benefits of its impending merger with Mountain West Financial. The team also lifts EverBank Financial (EVER +2.4%) to a Buy from Neutral.