We would have to know why the analyst downgraded them to be sure. But I can speak to what has changed, there are a couple of things that I see personally.
Number one, the financials are expected to have very little growth in their earnings over the next 6 months therefor if their price increased relative to their zero growth forcast they may be bumping up against realistic "peg" ratio'.
Secondly, for myself, there may be an over reaction to how the market perceives what the Fed is going to do.
Earlier in March Yellin gave some guidance toward increasing rates in mid 2015 which would help banks invest the trillions of dollars they have parked at the Fed. Well fast forward to this Monday (I think) where Yellin gave what many have said was the most dovish speech ever heard from a Fed chairman.
If the Fed were to raise the Fed funds rate from .25% up to lets say 2.25%, we are talking about Wells earning about an additional $8 billion annually. In other words we need short term rates to go up, all of this talk about the need for a steeper yield curve is also correct but not exactly a disaster if we don't get it. What we need is higher rates imo.
Mr. S, looks like Yellen is going to focus on improving employment if her actions are taken into consideration. I don't disagree. The banks will benefit as people get jobs and spend money, driving recovery and more investment. It needs to be bottom up this time, not top down like the TARP was. And that is what is playing out. This one is for the kids getting jobs, and for employment in general. TARP wasn't all that. Lets call it trickle up.
Keeb, my USB short is looking good. If you recall, i covered half for 0.37 and was promptly made fun of by WM.He said i covered too soon. But he didnt understand i still have a half position and i have posted last week that i am holding this. USB is a great stock. My short is merely a reflection of the toppiness of the broader market.