Global financial services firm UBS downgraded Bank of America (BAC) stock to Neutral (the equivalent of Hold) from Buy this week because it thinks the bank stock has limited upside over the next 12 months. Still, analysts raised their price target on BAC to $40 from $39.
Bank of America has shown "strong deposit growth, a reawakened investment banking and markets business and the prospect for accelerated buybacks," UBS said in its report, but this is "now fairly reflected in market multiples" with the stock in the high-$30s.
"While we continue to view BAC as a high quality stock and a beneficiary from higher interest rates, the stock currently trades at 12 times our 2025 earnings per share estimate, which is in-line with our target multiple and above the company's 11 times 10-year average,” UBS said.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
"As the market has shifted its stance towards expectations for a more gradual easing of interest rates (now expecting three cuts vs six in January), we think BAC's favorable asset sensitivity relative to peers has been reflected in the stock's performance and is now fully priced in," the analysts added.
The new price target of $40 by UBS implies an upside of about 8% from BAC's current stock price.
Bank of America is one of the world’s largest banks and the second-largest in the U.S. with total assets of more than $3 trillion and deposits of nearly $2 trillion.
CFRA is positive on bank earnings
CFRA Research analyst Kenneth Leon released a report ahead of first-quarter earnings for global U.S. banks, saying that they are "likely to see a sequential improvement in March versus December results, but year-over-year comparisons are likely to be flat to lower."
Leon notes that higher interest rates have benefitted net interest income of global U.S. banks and a "healthy U.S. economy" has been positive for loan volume growth.
The analyst concluded that JPMorgan Chase (JPM), Goldman Sachs (GS) and Morgan Stanley (MS) have the best chances to deliver better-than-expected results in the first quarter of 2024, but he's also positive on Citigroup (C) and Bank of America.
Q1 earnings season unofficially kicks off next Friday, April 12, with several big banks including JPMorgan reporting. Bank of America, meanwhile, hits the earnings calendar ahead of the April 16 open.
Analysts, on average, expect Bank of America to disclose first-quarter earnings of 71 cents per share, down 24.5% year-over-year. Revenue is forecast to fall 11% to $23.5 billion.
Related Content
-
Retired? How to Drop the Guilt and Spend Your Nest EggTransitioning from a lifetime of diligent saving to enjoying your wealth in retirement tends to be riddled with guilt, but it doesn't have to be that way.
-
Shutdown Freezes Federal Flood Insurance, Impacting Homeowners and BuyersFEMA's National Flood Insurance Program is unavailable for new customers, increased coverage or renewals during the government shutdown.
-
Are You Retired? Here's How to Drop the Guilt and Spend Your Nest Egg
Transitioning from a lifetime of diligent saving to enjoying your wealth in retirement tends to be riddled with guilt, but it doesn't have to be that way.
-
Government Shutdown Freezes National Flood Insurance Program: What Homeowners and Buyers Need to Know
FEMA's National Flood Insurance Program is unavailable for new customers, increased coverage or renewals during the government shutdown.
-
Separating the Pros From the Pretenders: This Is How to Tell if You Have a Great AdviserDo you leave meetings with your financial adviser feeling as though you've been bulldozed into decisions or you're unsure of what you're paying for?
-
What Netflix Stock's 10-for-1 Split Means for InvestorsNetflix announced its long-awaited stock split after Thursday's close. NFLX will start trading on a split-adjusted basis ahead of the November 17 open.
-
Stocks Sink with Meta, Microsoft: Stock Market TodayAlphabet was a bright light among the Magnificent 7 stocks today after the Google parent's quarterly revenue topped $100 billion for the first time.
-
Five Downsides of Dividend Investing for Retirees, From a Financial PlannerCan you rely on dividend-paying stocks for retirement income? You'd have to be extremely wealthy — and even then, the downsides could be considerable.
-
Dow, S&P 500 Slip on December Rate Cut Worries, Nvidia Boosts Nasdaq: Stock Market TodayNvidia became the first company ever to boast a $5 trillion market cap, but it wasn't enough to lift the Dow and the S&P 500.
-
I'm a CPA: Control These Three Levers to Keep Your Retirement on TrackThink of investing in terms of time, savings and risk. By carefully monitoring all three, you'll keep your retirement plans heading in the right direction.
