Truist analyst Brandon King cut stock price targets and earnings estimates for a host of banks, on expectations that net interest margins will fall, loan growth will slow and credit costs will increase. “[W]e continue to forecast a recession later this year with incrementally higher NCOs [net charge offs], provisioning and reserve levels,” King wrote in a note to clients. He believes continued credit tightening by the Federal Reserve will put further pressure on deposit flows and pricing. “We are also anticipating less excess liquidity deployment as banks keep more balance sheet liquidity on hand,” King wrote. Among the biggest percentage cuts to stock price targets, PacWest Bancorp’s PACW was cut to $13 from $29, while the bank’s earnings-per-share estimate was dropped to $1.45 from $3.27. Elsewhere, stock price targets for Western Alliance Bancorp WAL was lowered to $50 from $86, for Zions Bancorp ZION was decreased to $35 from $59 and for Comerica Inc. CMA was cut down to $54 from $78. Meanwhile, the SPDR S&P Regional Banking exchange-traded fund bounced 2.3% in premarket trading Thursday, after slumping 5.7% on Wednesday. The ETF has tumbled 29.4% so far this month through Wednesday, while the S&P 500 SPX has lost 0.8%.
Market Pulse Stories are Rapid-fire, short news bursts on stocks and markets as they move. Visit MarketWatch.com for more information on this news.