HSBC upgraded U.S. Bancorp (NYSE:USB) to Buy from Hold, PNC Financial (NYSE:PNC) to Hold from Reduce and downgraded Bank of America (NYSE:BAC) to Hold from Buy, all based on valuation.
Bank of America shares rose 37% in the past six months, "leaving limited implied upside to HSBC's target price" even as "there is a lot to like about Bank of America."
With U.S. Bancorp (USB) stock underperforming universal banks and the market, year-to-date, HSBC sees a buying opportunity. The firm expects USB profitability to expand in 2025 and continue to generate "near best-in-class ROTCEs."
The PNC upgrade "reflects a more attractive relative valuation after its year-to-date underperformance and the incorporation of a higher long-term ROE into its valuation framework," the analyst wrote in a note to clients.
HSBC expects PNC's (PNC) net interest income growth to re-emerge in H2 2024.