2015 All-America Research Team: Banks/Large-Cap, No. 2: Matthew OConnor
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2015 All-America Research Team: Banks/Large-Cap, No. 2: Matthew OConnor

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In the No. 2 position for a second year running is Matthew O’Connor of Deutsche Bank Securities.

< The 2015 All-America Research Team

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Matthew O’Connor

Deutsche Bank Securities

First-Place Appearances: 6


Total appearances: 8


Analyst debut: 2008


In the No. 2 position for a second year running is Matthew O’Connor of Deutsche Bank Securities. An improving macro backdrop combined with second-quarter results from most large-cap U.S. banks that matched or slightly exceeded expectations produced a rally in the shares earlier this year, he notes. Before being dragged back on concerns about a slumping Chinese economy and a general market sell-off this summer, the group posted a 21.2 percent advance off its January low point, besting the S&P 500 by 15.1 percentage points. The stocks subsequently shaved 13.9 percent between their late July peak and mid-September, lagging the broad market by 6.5 percentage points. “We prefer universal banks over brokerages, given additional cost cuts, leverage to rising rates and higher leverage ratios — which will be included in the [Federal Reserve’s] Comprehensive Capital Analysis and Review starting in 2017,” says O’Connor, 40. Charlotte, North Carolina–based Bank of America Corp. is his top pick, earning a buy rating and a price target of $20. The bank holding company appeals on many fronts, he explains, including leverage to higher interest rates, the alleviation over the next six months of capital concerns related to CCAR and Basel III regulatory frameworks, a likely additional round of cost cutting and an attractive valuation. “Core revenue may remain sluggish, but we expect further declines in both core and legacy expenses to mute this impact,” he adds. Bank of America’s stock closed in mid-September at $15.56.



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