JPMorgan Vs. Meredith Whitney on Regional Banks (CMA, KEY, SIVB, PBCT)

You have to love it when there are two high profile calls on the same topic that effectively say the exact opposite of each other.  That is the case when it comes to research calls on regional banks.  Last week it was Meredith Whitney with a call against regional banks, but today comes a call from JPMorgan noting that regional bank stocks are poised to rise.  A few of JPMorgan’s banks named were Comerica Incorporated (NYSE: CMA) and KeyCorp (NYSE: KEY), followed by SVB Financial Group (NASDAQ: SIVB) and People’s United Financial Inc. (NASDAQ: PBCT).

Last week on CNBC, Meredith Whitney told Maria Bartoromo, “… The banks have been all over the place so to say at this point and time the banks are off a little bit.  I don’t think there’s any way to make money on the banks.  But in terms, the regional banks for the state’s reason alone are in an impossible situation.  I would absolutely sell the regional banks.”  It can’t get much stronger of a call against the regional banks.

JPMorgan sees the world a bit differently.  The brokerage and banking giant is out loosely defending and recommending regional banking stocks.  This research note calls for increased exposure to the regionals.  The reason is based on credit improvement and as loan balance contractions are slowing.  Despite the economic recovery’s pace having slowed down, JPMorgan feels that this is now reflected in current valuations.  The call also notes that some of the regionals are likely to see double digit returns through 2011.

It is interesting when you see analysts using the same information and coming to opposite conclusions.  That is what makes a ballgame.

JON C.OGG