The fear of a potential recession due to the ongoing tariff wars and spending cuts by DOGE (the Department of Government Efficiency) under the Trump administration is weighing on U.S. stocks. It is also dragging down bank stocks as an economic slowdown would adversely impact the demand for loans and investment banking activity. Moreover, a recession could increase the instances of loan defaults. Despite the ongoing uncertainties, analysts are confident about certain bank stocks due to their consistency and solid execution in challenging macro backdrops. Using TipRanks’ Stock Comparison Tool, we placed JPMorgan Chase (JPM), Bank of America (BAC), and Wells Fargo (WFC) against each other to find the best bank stock that earns Wall Street’s Strong Buy rating.
JPMorgan Chase (NYSE:JPM)
JPMorgan, the biggest U.S. bank by assets, impressed investors with its Q4 2024 results. Remarkably, the company’s earnings, net interest income (NII), fixed income trading revenue, and investment banking fees grew at better-than-expected rates.
However, the bank warned investors about stubborn inflation and geopolitical conditions. Moreover, JPMorgan expects NII to decrease due to the anticipated interest rate cuts in 2025 and the impact of the 100 basis points of cuts announced in the second half of 2024.
JPM stock has pulled back about 16% over the past month but is still up 24% over a one-year period, making some analysts cautious about its valuation.
Is JPM a Buy, Sell, or Hold?
Recently, Baird analyst David George upgraded JPMorgan stock to Hold from Sell and increased the price target to $220 from $215. The analyst said that the risk/rewards in the U.S. banks group have improved, with the recent pullback presenting an opportunity to get more constructive.
George contends that while bank stocks could remain volatile in the near term, the upside potential outweighs the downside risk in several banks as the election buzz has faded. While he believes that JPMorgan is a “best-in-class franchise,” he prefers to be on the sidelines on JPM stock as he finds it to be “too pricey for new money.”
Wall Street has a Moderate Buy consensus rating on JPM stock based on 12 Buys and six Holds. The average JPMorgan stock price target of $274.40 implies 18% upside potential from current levels. JPM stock offers a dividend yield of 2.1%.
Bank of America (NYSE:BAC)
Bank of America ended 2024 on a strong note, with its fourth-quarter profit more than doubling to $0.82 per share. The company’s top line grew 15% in Q4 2024, thanks to higher asset management and investment banking fees and higher interest income.
Higher profits enabled the company to return $21 billion of capital to shareholders in 2024, which was 75% more than the return in 2023 and comprised an 8% increase in the dividend. BAC stock offers a dividend yield of 2.4%.
While a potential recession or economic slowdown could impact BAC over the short term, most analysts are optimistic about the bank’s ability to grow over the long term.
Is BAC a Good Stock to Buy?
Recently, Baird analyst David George upgraded Bank of America stock to Buy from Hold and increased the price target to $50 from $45, calling the bank a “great franchise at a reasonable price.”
The analyst highlighted the company’s best-in-class deposit franchise, consistent execution, relatively low credit risk, and presence in top-tier markets. George thinks that the stock’s valuation looks attractive following the recent sell-off. He added that BAC is well-positioned to return capital, backed by its healthy PPNR (Pre-Provision Net Revenue) profitability and modest balance sheet growth.
With 18 Buys and three Holds, Bank of America stock scores a Strong Buy consensus rating on TipRanks. The average BAC stock price target of $52.81 implies 29.2% upside potential. BAC stock has declined 13% over the past month but is still up 15% in the last 52 weeks.
Wells Fargo (NYSE:WFC)
Wells Fargo reported mixed results for the fourth quarter of 2024, with the bank delivering better-than-expected earnings but lagging behind revenue expectations. In fact, revenue declined slightly on a year-over-year basis, raising concerns about the bank delivering consistent revenue growth.
On the positive side, WFC continues to improve its profitability, backed by its cost-cutting initiatives. The bank is also focused on regulatory compliance and enhancing its risk management.
Is WFC Stock a Buy, Hold, or Sell?
Last week, RBC Capital analyst Gerard Cassidy upgraded Wells Fargo stock from Hold to Buy with a price target of $80. The analyst thinks that the recent pullback in the stock offers investors an attractive buying opportunity. Cassidy highlighted that under the leadership of CEO Charlie Scharf, WFC displayed solid execution and satisfied all its regulatory issues while increasing profitability.
The analyst thinks that WFC’s 15% ROATCE (Return on Average Tangible Common Equity) target implies that once the bank’s asset cap is lifted, WFC will execute its growth plan to reach its profitability target. Cassidy believes that WFC’s expense management is one of the drivers that is expected to drive profitability. He also highlighted that WFC is well capitalized and is likely to see regulatory relief under the expectation of a less “onerous regulatory environment.”
Overall, Wall Street has a Moderate Buy consensus rating on Wells Fargo stock based on 12 Buys and six Holds. At $83.60, the average WFC stock price target indicates 18% upside potential. Even after an 11% sell-off in WFC stock, it is still up more than 24% in the past year.
Conclusion
Wall Street is highly bullish on Bank of America stock but cautiously optimistic about JPMorgan Chase and Wells Fargo stocks. Analysts see higher upside potential in BAC stock than in the other two bank stocks. Bank of America’s scale and ability to consistently deliver profits make it attractive to most of the analysts covering the stock. They see the pullback in BAC stock as a lucrative opportunity to build a position.
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