Oppenheimer downgraded Bank of America (BAC) from Outperform to Perform. Analyst Chris Kotowski also downgraded Citigroup, Goldman Sachs, and Morgan Stanley as part of a broader sector re-evaluation.
The firm reports that large-cap banks have entered a late economic cycle. Investment bank valuations now trade at 107% of their historical average relative P/E after a long period of being undervalued since 2008.
Oppenheimer advises investors to take a cautious stance and lock in gains. The firm recommends redeploying capital into alternative asset managers or stable commercial banks like U.S. Bancorp and PNC Financial.