Bank of America Stock Pops After Q2 Earnings: What to Know

outside of Bank of America branch in New York — (Image credit: Michael Nagle/Bloomberg via Getty Images)

Bank of America (BAC) stock shot higher out of the gate Tuesday after the banking giant beat top- and bottom-line expectations for its second quarter.

In the three months ended June 30, Bank of America's revenue increased 0.8% year-over-year to $25.4 billion, with upside limited by a 3.2% decline in net interest income (NII) to $13.9 billion. The company also said earnings per share (EPS) fell 5.7% from the year-ago period to 83 cents.

"Our team produced another strong quarter, serving a growing client base," Bank of America CEO Brian Moynihan said in a statement, adding that the company's "Global Markets business delivered its ninth consecutive quarter of year-over-year revenue growth in sales and trading, earning double-digit returns."

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The headline results cruised past analysts' expectations. Wall Street was anticipating revenue of $25.2 billion and earnings of 80 cents per share, according to CNBC. Meanwhile, its net interest income result matched estimates.

"I thought that BAC had one of the stronger reports relative to peers and expectations," says David Wagner, portfolio manager at Aptus Capital Advisors. "Bank of America is one of the highest quality banks out there and when it is a difficult environment for NII, the bank can pull multiple levers to execute and BAC did just that, as their results were driven by better-than-expected non-interest income and lower-than-expected non-interest expense."

Bank of America also said it repurchased $3.5 billion of common stock during the quarter and reiterated that it will hike its quarterly dividend by 8%, which it first announced in late June following the release of the Federal Reserve's stress test results. Stock buybacks and dividends can boost value for shareholders.

Is Bank of America stock a buy, sell or hold?

Wall Street is bullish on Bank of America stock, which happens to be one of the biggest holdings in Warren Buffett's Berkshire Hathaway equity portfolio. According to S&P Global Market Intelligence, the consensus recommendation among the analysts it tracks is a Buy.

However, analysts' price targets have struggled to keep up with BAC's run higher. Indeed, the financial stock is up nearly 30% on a total return basis (price change plus dividends) in 2024 and more than 51% in the last year. Currently, the average price target of $42.24 represents a slight discount to current levels.

Given BAC's performance on the price charts and its latest quarterly beat, analysts may very well revise their estimates higher in the days and weeks ahead.

Joey Solitro is a freelance financial journalist at Kiplinger with more than a decade of experience. A longtime equity analyst, Joey has covered a range of industries for media outlets including The Motley Fool, Seeking Alpha, Market Realist, and TipRanks. Joey holds a bachelor's degree in business administration.