Deutsche Bank analyst Matt O’Connor upgraded Bank of America to Buy from Hold, and raised the target to $29 from $27. O’Connor believes the banking sector will improve in relation to the market. The analyst believes that BAC is a “higher quality bank” and obtains strong fundamentals based on it’s cost basis platform, credit and capital aspects. As such because this sector has overwhelming been under performing the market by 36 percent bank of america’s stock has now become a valuation play based on these metrics.
STA Research(stocktargetadvisor) has a average target of $28 on the stock, and a consensus Buy rating. STA’s view of the stock is Bearish with a score of 2.5 out of 10, where 0 is very bearish and 10 very bullish.
What to like:
Superior return on assets
The company management has delivered better return on assets in the most recent 4 quarters than its peers, placing it in the top quartile.
Positive cash flow
The company had positive total cash flow in the most recent four quarters.
What to not like:
Overpriced compared to earnings
The stock is trading high compared to its peers on a price to earning basis and is above the sector median.
Overpriced compared to book value
The stock is trading high compared to its peers median on a price to book value basis.
The company is in the bottom half compared to its sector peers on debt to equity and is highly leveraged. However, do check the news and look at its sector and management statements. Sometimes this is high because the company is trying to grow aggressively.
Low Earnings Growth
This stock has shown below median earnings growth in the previous 5 years compared to its sector
Low Revenue Growth
This stock has shown below median revenue growth in the previous 5 years compared to its sector
Low Dividend Growth
This stock has shown below median dividend growth in the previous 5 years compared to its sector.
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