Banks and major financial firms kick off the quarterly reporting season in a flurry this week with JPMorgan Chase, Wells Fargo, Citigroup (C), BlackRock and State Street (STT) all reporting early Friday. Bank stocks have generally traded tight, just off their recent peaks as investors await earnings.
X
UBS last Thursday raised its price targets on the reporting banks, noting a nice run for bank stocks coming out of the Q1 conference season, The Fly reported. Investors have “breathed a sigh of relief” over the lack of major revisions to net interest income outlooks. But UBS says there could be downward revisions still ahead if the odds of a Federal Reserve rate cut dwindle.
Meanwhile, Seaport Research last Thursday in a preview for financial earnings noted improving trends across investment banking, asset management and deposits, which should drive earnings increases in 2025. However, Seaport noted that Q1 results will take a hit from FDIC special assessment charges and the buildup of reserve provisions for credit cards. The firm also raised its price targets for the reporting banks.
Analysts forecast net interest income to rise for JPMorgan and Citi on a year-over-year basis but tick down from Q4. Wells Fargo’s net interest income is expected to fall 7.8% year over year to $12.37 billion, and down from $12.77 billion from last quarter.
JPMorgan Chase
FactSet analysts expect Dow Jones member JPMorgan‘s (JPM) earnings to increase 1.7% to $4.17 per share on 8.7% revenue growth to $41.69 billion.
JPMorgan’s earnings and revenue growth both slowed over the past two quarters.
JPM stock eased a fraction Thursday, to less than 3% below the April 1 high and poised for a rebound from support at its 21-day exponential moving average.
The stock has rallied 14.9% so far this year as bank stocks show promise.
Wells Fargo
Analysts predict a Wells Fargo (WFC) earnings decline 13.8% to $1.06 per share on a 2.5% revenue decline to $20.19 billion.
Wells Fargo’s earnings fell over the last three quarters to a 16% drop in Q4 from a 51% increase in the second quarter.
WFC stock inched lower Thursday as bank stocks and other stocks reacted to an inflation report.
Wells Fargo hit a two-year high of 58.44 on March 13 following its Jan. 30 breakout. The stock has consolidated gains over the past two weeks, narrowing the distance to its 50-day moving average. Shares are 3% off their March 13 high.
WFC stock climbed 15.2% in 2024.
Citi
Citi earnings are seen falling 46% to $1.18 per share while revenue declines 4.6% to $20.46 billion.
The bank’s revenue growth declined over the past three quarters to a 31% gain in Q4 from a 75% increase in Q1 2023.
C stock peaked at 63.90 on April 1, the highest level for the bank stock since February 2022, after a March 7 breakout.
Citi rallied more than 10% on the breakout but has fallen back to just 3% above the 57.95 buy point.
Shares ticked up nearly 1% Thursday, finding support at their 21-day line. C stock has jumped 18% year to date.
BlackRock, State Street
Meanwhile, regulators are probing BlackRock (BLK), State Street and Vanguard over their influence on U.S. banks, the Wall Street Journal reported on April 2. Regulators want to ensure the firms, which manage more than $23 trillion in assets, maintain a passive role regarding their investments. BlackRock and Vanguard each hold more than 10% of shares in various banks — a critical threshold for regulators.
Elsewhere, BlackRock’s Larry Fink faces a proxy vote to split his chairman and CEO roles following a challenge from activist investor Bluebell Capital Partners, the Financial Times reported last Friday. The activists claim that BlackRock’s 17-member board is too large and that there has been a failure to provide independent oversight of management. Voting on the matter will take place on May 15 during BlackRock’s annual meeting.
FactSet forecasts BlackRock earnings will jump 18% to $9.39 per share on 9.6% revenue growth to $4.65 billion.
BlackRock’s earnings growth slowed over the past two quarters. Revenue has accelerated over that period.
BLK stock reversed higher Thursday for a slight gain, but is below its 50-day line. BlackRock is trading 5% below an 819 buy point for a flat base following its Feb. 23 breakout.
A decline of 7% or more below the buy point triggers the automatic sell rule. Shares on April 4 tumbled below their 50-day line on a 101% spike in daily trade volume, which is also a sell indicator.
State Street
State Street earnings are expected to ease 1.3% to $1.50 per share while total revenue ticks down the same amount to $3.06 billion.
The company’s earnings and revenue fell the past two quarters, although the declines have slowed.
STT stock pared its decline to 0.6% Thursday.
State Street shares are down 4.6% so far this year, as are some other bank stocks, testing support at their 50-day moving average.
You can follow Harrison Miller for more stock news and updates on X/Twitter @IBD_Harrison
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