Richard Bove, an analyst who last month said that clients should stop buying financial stocks, recommended investors resume purchases after shares of U.S. banks tumbled.
Bank of America Corp., JPMorgan Chase & Co. and Citigroup Inc. are among lenders that investors should now buy because “they have fallen too much,” Bove, a Lutz, Florida-based analyst with Rochdale Securities LLC, said Wednesday in a research note. In a note to clients last month, Bove said clients should stop buying banks “since all stocks are likely to fall.”
Bank shares have slumped amid concerns that the U.S. may experience another recession and the European sovereign debt crisis will curtail profit. The KBW Bank Index has tumbled 21 percent since July 27 when Bove recommended that investors stop buying through yesterday. JPMorgan and Citigroup, both based in New York, have declined 14 percent and 29 percent, respectively, in that span. Bank of America has dropped 35 percent.
“Many banks are selling below their liquidation values, let alone their franchise values,” Bove said. “Many should be bought.”
The KBW index of 24 U.S. lenders climbed 3.3 percent today, led by an 11 percent gain for Charlotte, North Carolina-based Bank of America.
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