Top Wall Street names such as JP Morgan Chase (NYSE:JPM), Bank of America (NYSE:BAC), and Citigroup (NYSE:C) have delivered robust returns over the past year. While JPM has gained around 57%, Citigroup is up by about 37% over the past 52 weeks. Still, persistently muted M&A deal flow has meant banks are now exploring other avenues to drive growth this year.
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M&A Woes
Citi is slashing some positions in its investment banking unit in London amid a prolonged slump in M&A activity. According to Bloomberg, worldwide deal volume is around 17% lower than it was in Q1 2019. The slowdown comes amid elevated interest rates and global economic uncertainty. But Citi is not alone in resorting to a headcount trim. In recent times, Goldman Sachs (NYSE:GS), Barclays (NYSE:BCS), and JP Morgan Chase (NYSE:JPM) have slashed some positions. Morgan Stanley (NYSE:MS) too is trimming hundreds of positions in its wealth-management unit.
Hunt for Fresh Opportunities
Despite the dwindling M&A deal flow, fresh opportunities for growth remain visible. J.P. Morgan and Morgan Stanley are the lead book-runners for the IPOs of Astera Labs (NASDAQ:ALAB) and Reddit (NYSE:RDDT). Astera’s robust listing could mean better times for the IPO market over the coming periods. Multiple banks are also in the fray for an up to $20 billion share sale from energy behemoth Saudi Aramco and JPM is pegged to be the main underwriter for the share offering.
Banks are also shifting their gaze towards the global energy transition. Barclays is advising Equitrans (NYSE:ETRN) on its $5.5 billion sale to EQT Corp (NYSE:EQT). Morgan Stanely is planning to raise around $1 billion for a fund that will be focused on energy-transition bets. Interestingly, JP Morgan is creating a new sports investment banking unit. The development comes amid rising investor capital flow into the sports industry. JPM was one of the leading names in Jim Ratcliffe’s recent 25% stake acquisition in Manchester United (NYSE:MANU).
Which Bank Stock Is Best to Buy Now?
Share price gains in top banks have been largely muted so far this year, and analysts see limited upside potential in these names over the next 12 months. Of the names on our list today, the TipRanks Comparison Tool indicates the highest potential upside of 7.6% in Goldman Sachs.
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