One Of These Regional Banks Is Expected To Rally 50%

Based on Wells Fargo's analysis, several regional bank stocks could be big winners for investors due to the lack of major outflows.

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According to analyst Jared Shaw and Timur Braziler, Western Alliance is expected to bounce 60% by the end of the week. In addition to reiterating overweight ratings on Banc of California and East West Bancorp, F.N.B. Corporation was also given overweight ratings on Thursday evening.

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East West Bancorp Inc:     Price 54.62 

Banc of California Inc:       Price 11.89

FNB Corp:                          Price 11.54

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There are three stocks where Wells Fargo is most bullish, with Banc of California being the most bullish. In terms of price target, analysts have set it at $18, which is more than 50% higher than Thursday's closing price.

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In addition to Silicon Valley Bank's collapse, First Republic has also suffered large deposit outflows, so the bank could benefit from the struggles of other California banks.

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As a result of the recent events, BANC's scarcity value has increased, as CA banking has suffered significantly over the past four weeks. Although there are fewer near-term earnings catalysts, the current sub-TBV valuation provides an opportunity for long-term investors," Brazile wrote.

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A well-known banker praised the Bank of California for its impressive deposit mix, and he also praised the firm for continuing its stock buyback program despite the turmoil at regional banks.

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Investors should be reassured by F.N.B.'s prudent approach, Wells Fargo said. Its upside is about 27%, but that is not as eye-popping as the upside for F.N.B.

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As a result of the consumer-heavy deposit base, FNB displayed full balance sheet diversity in 1Q. We view the bank as conservatively run, which we expect to translate into financial performance during this time of economic slowdown," Shaw wrote in a client note.

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While analysts lowered their price target for East-West shares to $80 from $85, citing slower growth prospects, it is still more than 40% higher than Thursday's closing price.

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