- Obama says Boosting US Jobs is Top Priority
- More Consumers Giving 'Black Friday' the Cold Shoulder
- Prepare For Large Decline In Stocks, Next Year?
- Hewlett-Packard Earnings Rise, Match Guidance
- HP Comes in As Expected; Is It Time to Buy?
- Cramer: What Monday’s Housing Number Really Means
- Why the Dollar Will Likely Stay Weak for Some Time
- Bear, Lehman Execs Weren't Wiped Out by Crisis: Study
- How Real Estate Investors Skew Housing's Reality
- Can Murdoch Help Bing Challenge Google and Shift the Content Equation?
- HP's Mark Hurd
- HP Comes in As Expected; Is It Time to Buy?
- 9 Stocks That Play Rising Water Costs: Strategists
- Weis' Deal Likely Won't Change Big Money Contracts
- Gold Prices Can Double in 3 Years: Portfolio Manager
- Nov. 23: Unusual Volume Leaders
- Help Wanted—Please Run $4 Billion University
- Apple Comes to AT&T's Rescue
MOST SHARED
- The 'Real' Jobless Rate: 17.5% Of Workers Are Unemployed
- Wave of Debt Payments Facing US Government
- HP Comes in As Expected; Is It Time to Buy?
- Paul: Audit the Fed
- JAL Slides to Record Low on Bankruptcy Jitters
- Hewlett-Packard Profit Rises, Matches Guidance
- Prepare For Large Decline In Stocks, Next Year?
- The Social Media Gaming Threat
- Why Amazon Rules Retail
- Holiday Travel Outlook
Text Size 
European banks still have upside potential despite the recent rally, as the worst is over for the continent's financial institutions, analysts at financial services investment bank KBW, who upgraded the European banking sector to 'Overweight', said Monday.
"Most of the negative factors affecting the sector are being removed or fading," KBW analysts wrote in a market research note.
Liquidity continues to improve, house price deflation is tapering in some markets, structured credit writedowns seem to be largely done, the threat of very dilutive capital rises is fading, while that of nationalization is largely gone, they wrote.
The European banking sector is up 101 percent from the bottom hit on March 9, and it rose 20 percent this year.
It is trading at 1.3 times net asset value, from a low of 0.6 times, but banks are still 66 percent below their peak in the first half of 2007, when they were trading at 2.5 times net asset value, according to KBW analysts.
They recommend a portfolio of 11 stocks which make up 45 percent of the sector's market capitalization.
The safer side of the KBW portfolio comprises banks with strong capital, high profitability before provisioning for writedowns and strong deposit franchises: HSBC [HSBA-LN Loading... ()], with a target price of 640p, Santander, with 10.2 euros ($14) target price, BNP Paribas, with 57 euros, and NBG, with 25 euros.
For attractive risk/reward payoffs, KBW recommended Unicredito, with a target price of 2.3 euros, KBC with 22 euros, Deutsche Bank with 55 euros and Credit Agricole with 13 euros.
Among mid-caps, KBW favors DnB NOR, with a target price of 56 Norwegian krone ($8.75), BPM with 6.4 euros and Mediobanca with 10.7 euros.
Print
Email
- The show attracts a big TV audience every year, but this year it may take on even more importance.
- …you'll want to be prepared. Tips for getting the most out of the post-Thanksgiving shopping frenzy.
- Congressman Ron Paul explains to Squawk Box why he’s pushing legislation to audit the Federal Reserve.
- CNBC’s Phil LeBeau took a test drive of GM’s flagship electric car. Here’s what he thought of the Volt.
- The energy company Power Efficiency is building tools that regulate the power electric motors use.
- CNBC’s technology reporter Jim Goldman guides you through the best gadgets to buy this holiday season.
Data is a real-time snapshot *Data is delayed at least 15 minutes