Bank of America Corporation (BAC), with a market cap of $299.4 billion, is a leading financial services provider, offering a range of banking and financial products globally. Based in Charlotte, North Carolina, it serves individual consumers, businesses of all sizes, institutional investors, corporations, and governments.
BAC stock has significantly outperformed the broader market over the past 52 weeks. BAC has gained 40.7% over this time frame, while the broader S&P 500 Index ($SPX) has rallied 26.2%. In 2024, shares of BAC are up more than 14%, compared to SPX's 9.5% gains on a YTD basis.
However, zooming in further, BAC lagged behind the S&P Bank ETF SPDR's (KBE) 44.1% gains over the past 52 weeks.
While the high-interest rate environment has favored the bank over the past year, worries are emerging, especially among lower-income consumers, leading the bank to brace for potential payment defaults. The bank faced pressure on April 16, dipping about 3%, despite beating estimates in Q1, as investors fretted over elevated expenses and higher-than-expected charge-offs of bad loans. BAC’s Q1 performance mirrors a sector grappling with prolonged high interest rates, which, while potentially beneficial for net interest income (NII), also raises concerns about a slowdown in economic activity impacting loan demand.
For the current fiscal year, ending in December, analysts expect BAC’s EPS to decline 6.1% to $3.21 on a diluted basis. However, the company has a track record of consistently beating consensus estimates in the last four quarters.
Among the 24 analysts covering the stock, the consensus rating is a “Moderate Buy.” That’s based on 10 “Strong Buy” ratings, one “Moderate Buy,” 12 “Holds,” and one “Strong Sell.”
This configuration is slightly more bullish than a month ago when there were nine “Strong Buy” ratings, one “Moderate Buy,” 13 “Holds,” and one "Strong Sell."
On April 19, Wolfe Research analyst Steven Chubak upgraded Bank of America from a "Peer Perform" to an "Outperform" rating and set a $42 price target, which implies a potential upside of around 9.2% from the current price levels.
While the stock is trading slightly below its mean price target of $38.54, the Street-high target of $46 suggests an upside potential of 19.6% from the current price levels.
On the date of publication, Sohini Mondal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
