Shares of BB&T (BBT) are off $1.17, or 3.5%, at $32.57, and U.S. Bancorp (USB) is off $1.20, or 5%, at $24.41, after Deutsche Bank analyst Matt O’Connor today cut his rating on both stocks to “Hold” from “Buy,” as part of a selective paring of his list of banks on worries about global government debt levels.
The stocks have both been defensive stock picks in a world of regulatory uncertainty for banks, writes O’Connor, but if global regulatory risk fades, then both will be less apt to rally versus other banks.
Add in that both BB&T and USB have dwindling credit leverage and sluggish loan demand is hampering their ability to take market share.
O’Connor maintains a “Buy” on Citigroup (C), JP Morgan Chase (JPM), Wells Fargo (WFC), SunTrust Banks (STI), and PNC Financial Services (PNC).
Bank stocks are broadly lower today, as measured by the 23-cent dip in the Financial Select Sector SPDR exchange-traded fund (XLF).
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