A frustrating search for value
The European Banks sector seems to us to be determined to deny its audience
positive newsflow. As we look at results season, we find negative earnings
momentum overall, directors dealings' weighted to sells, and an upcoming set of
stress tests that we expect to disappoint the market. We still see upside in the
banks, with the sector back to 1.0x 2012E P/TBV after poor performance over the
last month. But we expect the sector to stay range-bound and capped at 1.2x
P/TBV (reduced versus our previous 1.3x P/TBV target).