The bulls refuse to take any sell-off lying down! The S&P/ASX 200 Index (Index:^AXJO) rebounded from its morning sell-off triggered by a weak lead from Wall Street, but eager bargain hunters soon turned the market around.
The top 200 benchmark fell nearly 1% in the first 15 minutes of trade but clawed back to be 0.5% in the black during lunch time trade.
However, the big banks remain under pressure after their big rally pushed them closer to fair value. If you are looking for attractive buys, you may need to look at their smaller rivals as brokers just upgraded three of them to "buy".
Improving margin
One stock that got moved to the "buy" list is Bendigo and Adelaide Bank Ltd (ASX: BEN).
JP Morgan changed its recommendation on the regional bank to "overweight" from "neutral" today as it believes that the market isn't fully appreciating the upside.
"With COVID-19 infection rates under control in Australia and lockdown rules easing, there is increased optimism that the Jun-20 quarter trough in the economy will not be as bad as first thought," said the broker.
"Recent data have pointed to improvements in term deposit spreads. This is likely to continue."
JP Morgan's price target on Bendigo Bank is $8.10 a share.
Cum-upgrade cycle
Another bank stock that is under appreciated by the market is the Bank of Queensland Limited (ASX: BOQ) share price.
Goldman Sachs also upgraded its call on BOQ to "buy" from "neutral" as it believes consensus earnings forecasts are too conservative.
"We now have more confidence that BOQ will be able to reach its management target of broadly flat 2H20E NIMs [net interest margins], and sit c.8% above Bloomberg FY21E consensus," said the broker.
Goldman Sachs increased its price target on the stock to $7.17 from $5.51 a share.
Small cap bank buy
Coincidentally, another Queensland-based bank also got upgraded by Bell Potter to "buy" from "hold". This is small cap lender Auswide Bank Ltd (ASX: ABA).
Auswide is Australia's newest bank as it mothed from its previous form as a credit union called Wide Bay Australia.
The broker believes that if the re-rating were to be applied to Auswide, fair value for the stock would increase by 17% to $5.15 a share.
A re-rating is when the implied discount rate on a sector's valuation is lowered due to higher investor confidence.
Further, Auswide is also sitting on a reasonable forecast yield of 4.5% even after Bell Potter cut its forecast final dividend by 53%.
