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Here are analysts’ favorite regional banking stocks as sector recovers from its crisis lows

June 11, 2023 Published by

US Top News and Analysis 

Investors could have reason to warm up to regional bank stocks. The liquidity crisis that started with Silicon Valley Bank , spread to First Republic and pressured the shares of peer institutions is still recent enough to give Wall Street pause about rushing back into regional bank stocks. But the SPDR S & P Regional Banking ETF (KRE) is showing some signs of strength. Over the past month, the regional bank fund has added nearly 17%. While the KRE is still well below its crisis-era lows from early May, some regional bank stocks seem to have swayed analysts that the worst is behind them. KRE 1M mountain The regional bank ETF over the past month. CNBC used FactSet data to screen for regional bank stocks that meet the follow criteria: A minimum of six analysts cover the stock At least 55% of analysts covering the stock maintain buy ratings The implied upside from analysts’ price targets amounts to 25% or more Valley National ‘s stock has lost more than 25% from the start of the year. While the bank felt the pressure from the broader regional banking crisis, analysts aren’t fleeing the stock. On Monday, JPMorgan upgraded shares of Valley National to overweight from neutral, with the firm asserting that vulnerability from weakness in the commercial real estate lending market were unfounded. VLY YTD mountain Valley National stock is down more than 25% from the start of the year. More broadly, 70% of analysts polled by FactSet maintain a buy rating on Valley National stock, with 11 analysts covering the firm. The mean price target implies more than 25% upside from current trading levels. Western Alliance , meanwhile, has analysts more bullish. Despite having its shares routed during the regional bank crisis, 93.3% of analysts polled by FactSet rate Western Alliance stock as a buy. Shares are down 34% in 2023. WAL YTD mountain Western Alliance stock has pulled back 33.3% from the start fo 2023. Analysts’ average price target implies nearly 40% upside for Western Alliance stock. Citizens Financial stock has declined roughly 28% from the start of 2023. The firm said on Wednesday that it would no longer offer indirect auto loans in an effort to optimize its balance sheet and foster stronger banking relationships with its customers. Of the analysts covering the stock, 56.5% of them rate the stock as a buy, with the average price target implying more than 26% upside. CFG YTD mountain Citizens Financial has been focused on strengthening client relationships in recent months, most recently by suspending indirect auto loans. Old Second Bancorp is the top pick on this list, as 100% of the six analysts covering the stock rate it a buy. The average price target implies nearly 27% upside from current trading levels. Shares are down about 16% from the start of the year.

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