Respected analyst Dick Bove predicts that the stock price of Citigroup and Bank of America could double in value over the next two years.
"In the case of both Citi and Bank of America (BofA), you have two companies which are selling at 35 to 40 percent discount to book value which is, in my view, absurd. I think these stocks are unbelievably attractive," Bove, Vice President of Equity Research Financial Sector at Rafferty Capital, told CNBC
"And I think that both stocks over the next 18-24 months should be able to double."
Near midday Thursday, Citigroup stock
was at $45 and Bank of America stock
was at $14.
Banks have gotten off to a dismal start this year because investors fear financial institutions face huge losses on loans to energy companies after the oil price collapse, The New York Times
has reported. Low interest rates are also hurting bank stocks because they erode profits banks make on loans, the Times reported.
Some experts say just the slightest good news will probably buoy the shares of banks, the worst-performing sector in the market this year, the Times reported.
“Bank stocks have been so beaten up that any good news, either on better credit conditions driven by higher energy prices or news on cost-cutting, is likely to underpin those stocks,”
Julian Emanuel, equities and derivatives strategist for UBS, told the Times.
(CNBC Disclosure: Dick Bove owns shares of Bank of America)
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