Balanced View on BofA - Analyst Blog
March 12 2013 - 10:10AM
Zacks
On Mar 11, 2013, we reiterated our long-term recommendation on
Bank of America Corporation (BAC) at Neutral. This
reflects BofA’s fourth-quarter results, which were marginally ahead
of the Zacks Consensus Estimate.
Why Neutral?
BofA’s fourth-quarter earnings of 3 cents per share beat the Zacks
Consensus Estimate by a penny. Better-than-expected results were
primarily driven by significant slowdown in provision for credit
losses and a decline in operating expenses, partly offset by lower
top-line growth.
Following the fourth-quarter results, the Zacks Consensus Estimate
for 2013 has remained stable at $1.00 per share over the last 60
days. The Zacks Consensus Estimate for 2014 advanced 3.1% to $1.31
per share, in the same time frame. Hence, BofA now has a Zacks Rank
#3 (Hold).
BofA remains focused on maintaining steady capital levels. This is
further evident from the clearance of the 2013 stress test.
Further, BofA has been relentlessly trying to realign its balance
sheet in accordance with the regulatory changes post the meltdown
to remain afloat. All these initiatives are expected to go a long
way in improving the company’s financials in the subsequent
quarters.
Yet, BofA’s elevated cost structure remains a cause of concern.
Moreover, the company still faces numerous litigations pertaining
to Countrywide Financial, which are expected to have a material
impact on its financial stability going forward. We are also
concerned about the company’s top-line growth, which continue to be
impacted by the low rate environment and sluggish economic
recovery.
Other Major Banks Worth Considering
While we prefer BofA, other major banks worth a look include
BankUnited, Inc. (BKU), Comerica
Incorporated (CMA) and State Street
Corporation (STT). While the first stock carry a Zacks
Rank #1 (Strong Buy), other two retain a Zacks Rank #2 (Buy).
BANK OF AMER CP (BAC): Free Stock Analysis Report
BANKUNITED INC (BKU): Free Stock Analysis Report
COMERICA INC (CMA): Free Stock Analysis Report
STATE ST CORP (STT): Free Stock Analysis Report
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