Credit Suisse Downgrades BofA, Favors Other Banks (CS, BAC, JPM, C, USB)

Today’s downgrade is to Neutral from Outperform. as the analyst team said that the bank’s current market valuation appears to be ahead of the company’s near-term to intermediate-term performance. What is interesting is that the target price appears to have gone to $12 from the $11 listed previously.

Credit Suisse prefers the other money center banks. It said:

The banking environment remains challenging in terms of the revenue and loan growth outlook; however, banks continue to make progress on controlling expenses and improving capital — which will be critical levers in 2013. We think that the banks best positioned are those institutions that can grow revenues, effectively manage expenses and deploy capital.

The firm ranks Citigroup, Inc. (NYSE: C), J.P. Morgan Chase & Co. (NYSE: JPM) and US Bancorp (NYSE: USB) on the top of its list of other banks. Credit Suisse’s top stock pick for 2013 is Citigroup.

Today’s downgrade also said that the stock price for Bank of America now appears to be discounting significantly faster improvements in efficiency than Credit Suisse is expecting. At its current valuation, the shares appear to be discounting at least a 16% improvement in costs over the next year versus its estimate of 10%.

Bank of America shares closed at $11.98 on Friday and the stock has already hit a high of $12.20 so far in 2013. Its shares are currently up 3.2% so far in 2013, but the peak price so far has been a gain of 5.1%.

Meredith Whitney made waves with a big upgrade back on December 17, but it is important to realize that the bank stock is up more than 13% from the closing price the day before Meredith Whitney’s upgrade.