European banks’ efforts to narrow the once-significant valuation gap with their American peers have faced what many analysts expect will prove to be a temporary setback. Despite their strong fundamentals, valuations of European banks haven’t kept up with this momentum, leaving stocks undervalued and lagging behind their U.S. counterparts. Many analysts consider the falls in European banking stocks to be overdone, although some favor waiting until the election results are in to see the impact more clearly. “We see the election-induced selloff in French banks as an opportunity," analysts at Jefferies said in a note to clients. France’s central bank chief recently said that the country’s banks remain solid as their liquidity and capital strength haven’t been hit by market moves.

Source: Wall Street Journal June 28, 2024 12:14 UTC