JPMorgan tips BlackRock, Charles Schwab, and KeyCorp as Best Financial Stocks for 2018 – The giant Wall Street investment bank JPMorgan has offered a positive assessment of the outlook for financial stocks in 2018. The firm expects financial stocks to continue their rise, and build upon late 2017’s trend in upward momentum.
Financial Stocks Advice
The JPMorgan research group announced its top financial stock tips to clients in a note earlier this month. It read, “We expect large bank stocks in 2018 to continue to be driven by changes in regulations and taxes. We see investor sentiment on regional bank stocks improving in the year ahead, particularly with tax reform now making progress (and regional banks a key benefactor) and new leadership at key regulatory agencies taking a much more friendly approach with banks.”
The Financial Select Sector SPDR Fund was up 18 percent in November, and financial stocks have outperformed the market since May, showing an impressive 18 percent gain compared to the S & P 500 index’s 10 percent growth.
Top Stock Picks For 2018
JPMorgan’s top picks for financial stocks include Blackrock, Charles Schwab, and KeyCorp. The analyst Kenneth Worthington revealed a $558 12 month price target for BlackRock shares, 12 percent up on last week’s closing price.
“BlackRock generates significant income from abroad, and we see the company benefiting from higher fee rates and margins, driven by better non-US equity market returns, as non-US operations are typically higher fee and higher margin. Higher international earnings should also lower taxes. BlackRock continues robust organic growth, driven by iShares and Aladdin. BLK is our top pick heading into 2018.”
Worthington set a 52 12 month price target for Charles Schwab shares, an increase of 7 percent over last week’s closing price.
“We see potential for SCHW shares to perform well around the higher interest rate outlook and growing bank assets. We expect Schwab bank asset growth to increase substantially with faster and larger transfers from money market fund assets to bank assets.”
Lastly, analyst Steven Alexopoulos placed a $21 12-month price target on KeyCorp, 11% up from last week’s close.
“KEY shares trade at a depressed multiple vs. peers in our coverage as well as to a basket of larger regional banks. We like the setup of (1) a low bar from the market while (2) management is aiming high. As KEY works to become a top-performing regional bank, with the corporate bank a key driver, we see valuation improving.”