< The 2015 All-America Research Team
Steven Alexopoulos
J.P. Morgan
First-Place Appearances: 5
Total Appearances: 7
Analyst Debut: 2009
For a fifth straight year, Steven Alexopoulos occupies this winner’s circle, largely on the strength of what one money manager calls his “detailed reports on individual banks and his helpful work on rate positioning.” The J.P. Morgan analyst takes a contrarian view of regional U.S. banks, forecasting that “interest rates’ being low for long could create a valuation opportunity for bank stocks and push them, at least over the short run, above fair value.” In mid-September the sector was down 7.5 percent for the trailing 12-month period, against the broad market’s decline of 2.6 percent. Alexopoulos, 44, projects that a gradual pace of expected increases in the Federal Reserve’s benchmark lending rate together with a lower ultimate level would create an ideal scenario, “given the combination of deposit costs remaining very low even in a rising-rate environment, the yield on earning assets improving and credit costs remaining very low.” He is recommending “several highly differentiated niche growth banks in our coverage universe that we believe offer a significant opportunity to drive outsize returns in the year ahead.” These firms are “picking up significant new business in their markets,” the researcher notes. SVB Financial Group is his prime example on this theme. The Santa Clara, California–based lender enjoys a competitive advantage as the banker to innovation enterprises, including those in technology and life sciences industries, he advises, and “as the current front-runner in being the category winner in this coveted segment.” What’s more, SVB Financial is “the most levered to see an earnings ramp tied to liftoff in the Fed funds rate,” he notes. In mid-September the stock was trading at $119.71; his price objective is $175.