Bank of America today
Bank of America
- 52 week range
- $31.40
▼
$48.08
- Dividend yield
- 2.23%
- P/E ratio
- 16.93
- Target price
- $48.58
After Warren Buffett decided to reduce his holdings in the financial sector, Bank of America Co. New York Stock Exchange: BAK being one of his sell options, many investors in the market are weary of where the system, if not the economy as a whole, might be headed. As earnings season begins in the first quarter of 2025, other banking companies could show a broader trend for the S&P 500 and the U.S. economy.
Exactly the same as the results obtained Goldman Sachs Group Inc. New York Stock Exchange: GSwhich signaled a potential improvement in funding conditions driven by a rally in bond and credit markets driven by improving credit risk and the macro outlook for potentially lower yields in coming quarters. While Goldman Sachs covers much of the business cycle and capital markets, investors will get an inside look at what the consumer economy is going through today.
By focusing not only on Bank of America’s quarterly results, but also on how its various segments and key performance indicators (KPIs) performed during the most recent quarter, investors may come to different conclusions for both the stock itself and the economy as a whole. . Let’s start with a review by Wall Street analysts. Here’s how Bank of America fares in its industry and in the eyes of investors.
Wall Street’s take on Bank of America stock
There’s a reason Wall Street analysts are now forecasting earnings per share (EPS) of $0.92 for Bank of America shares for the same quarter next year. That would be a net growth rate of 12.2% from today’s EPS level of $0.82, and achieving double-digit financial growth for a financial institution is not something investors come across very often.
Bank of America stock forecast today
$48.58
Growth potential 4.36%Moderate purchase
Based on ratings from 23 analysts
| High forecast | $58.00 |
|---|---|
| Average forecast | $48.58 |
| Low forecast | $39.00 |
Bank of America stock forecast details
Knowing this, it would also make sense for Barclays analysts to maintain an Outperform rating on Bank of America shares as of January 2025. However, this time, these analysts also raised their estimate for the company to $58 per share, calling for up to 23.4% growth from where the stock is trading today.
Now, with shares trading at 95% of their 52-week high, market momentum appears to be geared to give Bank of America shares another bull run this year. The fundamentals reflected in the quarterly results justify these views, as investors will soon learn.
Bearish traders understand that the economy, especially the consumer economy, has improved based on the quality and volume of loans seen at commercial banks such as Bank of America. That’s why investors may notice a 1.4% decline in short interest in the stock over the past month as a sign of bearish capitulation.
Fundamentals support Bank of America’s growth
As a commercial bank, it is expected to have a variety of debt products on its balance sheet, such as auto loans, credit cards and mortgages. This means that if Goldman Sachs is correct in its view of the credit markets, then yields will decline and significantly increase the cost of these products due to their inverse relationship.
Overall, this will increase the value of the bank’s balance sheet and therefore its book value per share. With Bank of America stock trading at a price-to-book (P/B) of 1.4x today, investors today could take advantage of a significant discount to the broader financial sector and its average P/B ratio of 2.6x.
And this is where Bank of America is truly showing improvements in consumer lending and aligning the stock with the growth potential that Wall Street is calling for today. In its quarterly earnings presentation, management pointed to the first decline in net charge-offs in more than a year, meaning fewer loan accounts defaulted.
Moreover, provisions for net credit losses also fell more than a year in the first quarter, suggesting that management has a more positive outlook on the future of credit markets and consumer quality. A look at Bank of America’s mortgage business could give investors another indicator of the health of the economy.
Bank of America’s new mortgage originations rose to $6.6 billion in the quarter, up 24.5% from $5.3 billion in the most recent quarter. In addition to the increase in net income, the average FICO score also improved from 772 last quarter to 775 this quarter, supporting the bullish trends underlying a potential recovery in the consumer and credit markets.
Investors shouldn’t be surprised by recent institutional buyer activity, such as Gateway Investment Advisers’ 1.2% increase in assets to January 2025. This distribution brings their net position to a high of $93.7 million today, which is another bullish indicator for investors to consider. in commercial economics.
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