The financial sector has been a standout performer in 2024, delivering strong returns for investors. Early concerns, such as the collapse of several small- to mid-sized U.S. banks, were overshadowed by optimism around an improving economy and lower borrowing costs. Year-to-date, the S&P 500 Financial Sector Index has outpaced the broader market, gaining over 28% year-to-date, compared to the S&P 500’s (SPX) 25% rally. Wondering if this impressive rally would continue in 2025?
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Financial Sector on Stronger Ground in 2025
Heading into 2025, the outlook for the financial sector remains positive. Continued economic growth, coupled with potential interest rate cuts by the Federal Reserve in 2025, could further boost lending activity and stimulate economic growth.
Moreover, a less aggressive regulatory agenda under Trump administration could create a more favorable environment for mergers and acquisitions, as well as initial public offerings (IPOs), all of which can benefit financial institutions.
3 Finance Stocks Poised to Gain in 2025
Amid this backdrop, the future of finance stocks looks bright. Using TipRanks’ screener, we’ve identified three such stocks that have received a Strong Buy consensus rating from Wall Street analysts. Further, all of these stocks have an upside potential of more than 5% in the next 12 months. Let’s take a closer look at these stocks.
Bank of America
Bank of America (BAC) is a global financial services company that offers banking, investment management, and wealth management-related products and services. The company is well poised to benefit from lower interest rates in 2025 due to its interest rate-sensitive balance sheet. This means that when interest rates are high, the company’s net interest income (NII) faces pressure due to increased funding costs.
To drive NII growth and strengthen customer relationships, BofA is expanding its branch network across the United States. The company plans to open over 165 new financial centers by the end of 2026, with nearly 40 set to open this year.
Turning to Wall Street, analysts have a Strong Buy consensus rating on BAC stock based on 14 Buys and two Holds assigned in the past three months. At $51.43, the average Bank of America price target implies a 17.18% upside potential. Shares of the company have gained 33.69% year-to-date.
Goldman Sachs Group
Goldman Sachs (GS) is a global investment banking, securities, and investment management firm. A robust global economy and increased M&A activity could lead to higher investment banking fees for the company. Also, its asset management division could benefit from strong market performance and increased demand for investment products in 2025.
Overall, GS stock has a Strong Buy consensus rating based on 12 Buys and four Holds assigned in the last three months. At $614.27, the average Goldman Sachs price target implies a 7.62% upside potential. Shares of the company have gained 51.5% year-to-date.
BlackRock
BlackRock (BLK) is the world’s largest asset manager and offers a wide range of investment products, including ETFs, mutual funds, and other investment solutions. The growth of BLK’s assets under management (AUM) can be fueled by investors shifting focus to higher-yielding assets like equities and alternative investments. Also, enhanced market liquidity will attract new investors, further boosting AUM growth.
Overall, BLK stock has a Strong Buy consensus rating based on 14 Buys and two Holds assigned in the last three months. At $1,117.88, the average BlackRock price target implies a 7.52% upside potential. Shares of the company have gained 31.1% year-to-date.
Concluding Thoughts
The financial sector’s strong performance in 2024 sets a promising foundation for continued growth in 2025. With an improving economy, potential interest rate cuts, and a more favorable regulatory environment, the sector is well-positioned for further gains.
