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Bove Bullish on Bank of America, Financial Stocks

By    |   Wednesday, 13 Jan 2010 03:00 PM

Richard Bove, a bank analyst at Rochdale Securities, sees good times ahead for financial institutions.

“What we’re looking at is an improvement in the economy that will result in consistent declines in loan losses over the next two or three years,” he told Bloomberg.

“(That) will result in huge increases in bank earnings.”

He recommends investors buy Bank of America.

But many investors apparently disagree.

Financial stocks represent the least favorite sector for money managers, according to a Bank of America survey.

It shows that 38 percent of the 123 money managers surveyed hold a smaller weighting of financial shares than is in their benchmark indices.

These investors are bearish despite analysts’ estimate that financial company earnings rose 120 percent in the fourth quarter. That accounts for all of the increase expected in the Standard & Poor’s 500 Index, Bloomberg reports.

Bove does have some company.

“The stocks are clearly too cheap,” Mark Giambrone, a fund manager for USAA Investment Management, told Bloomberg.

“There may be some bumps in the road ahead, but for the most part those are reflected in the valuations.”

Meanwhile, superstar bank analyst Meredith Whitney remains downbeat on the banking industry.

“I don't think there are growth opportunities in the traditional banking system right now,” she told PBS.

“I just don't see any growth for most financials and certainly out of the banks, who are going to have lower assets, lower earnings. What's growth about that?”

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Richard Bove, a bank analyst at Rochdale Securities, sees good times ahead for financial institutions. What we re looking at is an improvement in the economy that will result in consistent declines in loan losses over the next two or three years, he told Bloomberg. ...
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Wednesday, 13 Jan 2010 03:00 PM
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