Bank stocks experienced a sharp pullback triggering a revaluation of value Analysts are optimistic about the prospects for American banks.

In recent days, market concerns about economic slowdown and financial market volatility have intensified, leading to overall selling of bank stocks. As one of the defensive sectors in the market, many bank stocks are currently relatively cheap in terms of price-to-earnings ratio and book value. These include Bank of America Corp (BAC.US), Citigroup Inc. (C.US), Goldman Sachs Group, Inc. (GS.US), and Jefferies Financial Group Inc. (JEF.US). The Invesco KBW Bank ETF (KBWB.US), which reflects the overall performance of bank stocks, has fallen by about 25% from its peak. Investors are worried about the risk exposure of the banking industry in times of economic and market turbulence. Amid the overall pessimistic industry outlook, Morgan Stanley analyst Betsy Graseck released a report on Monday upgrading Bank of America Corp from "Equal Weight" to "Overweight." She pointed out that Bank of America Corp's stock price is only 8 times her earnings forecast for 2026, making it attractive. The current stock price is $34.70, still below the book value of $36 per share at the end of 2024. Her target price for Bank of America Corp is $47. Furthermore, the decline in U.S. Treasury yields has helped alleviate the book losses in Bank of America Corp's securities portfolio of over $100 billion. CEO Moynihan has always followed a strategy of "responsible growth" and maintained industry-leading loan quality levels. On the other hand, Citigroup has recently shown weaker performance, with its stock price falling by 1% on Monday to $57.60, a decline of about 33% from its high of $85 in February. Wells Fargo & Company analyst Mike Mayo said, "Whenever a crisis occurs, investors instinctively sell Citigroup like Pavlov's dogs." Nonetheless, he still sees Citigroup as the top bank stock for 2025. Citigroup's position among investors is relatively fragile due to low returns and frequent operational errors. The current stock price is just over half of the book value of $101 at the end of 2024, with a P/E ratio of less than 8 times. It is worth mentioning that Citigroup is a leader in global corporate cash management, serving business customers in approximately 100 countries. Mayo believes that Citigroup's restructuring is gradually optimizing its business structure and improving future return potential. As for Goldman Sachs Group, Inc., the stock price fell by 1.7% on Monday to $462.85, a 30% decline from its high of $672 in February. Since its listing in 1999, Goldman Sachs Group, Inc.'s stock price has often been a good buying opportunity near book value and a selling opportunity near twice the book value. Currently, Goldman Sachs Group, Inc. has a P/B ratio of about 1.4 times, with a book value of $337 and robust asset quality. However, Graseck downgraded Goldman Sachs Group, Inc. from "Overweight" to "Equal Weight," citing the firm's high dependency on investment banking in the large bank sector, which also makes it more sensitive to economic downturns and market deterioration. She lowered her earnings forecast for Goldman Sachs Group, Inc. for 2025 from about $46 to $42.71 per share and expects its return on equity in 2025 to be 12%, below the target range of 14% to 16%. Nevertheless, Goldman Sachs Group, Inc.'s trading business may offset the weakness in investment banking this year, with the current stock price at about 11 times the expected earnings for the year. Jefferies Financial Group Inc.'s stock price has fallen by nearly 50% since its high in January, closing at $42.10 on Monday, back to the trading range of 2021 and below its nearly $50 book value. With a market capitalization of only $9 billion, Jefferies Financial Group Inc. lacks the "too big to fail" policy protection, but has consistently operated soundly with good risk control. As we enter 2025, Jefferies Financial Group Inc. has performed well in terms of shareholder returns compared to its peers. The company's longtime CEO, Rich Handler, owns approximately 8% of the company's shares, with a market value of about $700 million, making him one of the highest-ranking executives in terms of ownership in the industry, and he has always run the company with an "owner's" mindset. In contrast, JPMorgan Chase remains a top performer in the banking industry. Investors in JPMorgan Chase benefit from a top management team led by Jamie Dimon, as well as its financially sound balance sheet known as the "fortress balance sheet."