Wolfe Research released its 2020 outlook report on financial services companies.
Wolfe Research analysts upgraded Bank of New York Mellon Corp., State Street Corp. and TD Ameritrade Holding Corp. to outperform, while Lazard Ltd. was upgraded to peer perform. The analysts also downgraded Evercore Inc. to peer perform.
The analysts wrote that Bank of New York Mellon's EPS could see double-digit growth as a result of this year's expected moderate economic growth and low inflation, helped by Fed balance sheet expansion, an improved interest rate backdrop, flat expenses, low credit risk and outsized buyback capacity.
State Street has the most volatile stock according to the analysts. The company's share recovery seems to be justified as management outlined a compelling EPS walk supporting a higher valuation and meaningful EPS upside, the analysts wrote.
The analysts' rating on TD Ameritrade aligns with Charles Schwab Corp. and was upgraded with the likelihood that the merger between Charles Schwab and TD Ameritrade will close in the second half of the year.
Lazard's improving advisory fee backlog, the company's management fees and above-peer dividends were cited by the analysts as reasons for upgrading the company's stock to peer perform.
The analysts downgraded Evercore to peer perform, expecting declines in senior managing director productivity from peak levels. Other reasons for the downgrade include a flat mergers and acquisitions backlog and increases in banker productivity that have outpaced senior managing director net hiring at the company.