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Pro Analysis

Be wary of bank stocks into earnings season because of high expectations, strategist says

Caution tape, market
Kohei Iwata | EyeEm | Getty Images

CFRA Research warned investors about bank stocks ahead of earnings results due to high valuations and aggressive Wall Street estimates.

The firm cited how the S&P 500 bank industry group has rallied more than 20 percent since the election.

"There has been much optimism baked into the market regarding the potential benefits from the Trump administration's policies regarding tax reform, deregulation and capital spending, and the banks' shares have been key beneficiaries of that optimism," investment strategist Lindsey Bell wrote in a note Thursday. "We are in wait-and-see mode with regards to legislation on reducing regulation and greater economic growth that forces the Fed to increase interest rates more quickly."