Stock market today: S&P 500 ekes out closing record high despite wobble in chips
Investing.com - Citi raised its price target on Bank of America (NYSE:BAC) to $54.00 from $50.00 on Thursday, while maintaining a Buy rating on the stock. Currently trading at $46.85, near its 52-week high of $48.08, BAC appears undervalued according to InvestingPro’s Fair Value analysis.
The firm noted that expectations for Bank of America appear "reasonably set" heading into the second-quarter earnings report, scheduled for July 16, describing BAC as one of the more consensus-long names despite increasing short-momentum over the last three months. With a P/E ratio of 13.82 and a market capitalization of $353.32 billion, BAC remains a prominent player in the banking sector.
Citi pointed out that management recently reiterated its 2025 exit-rate net interest income (NII) guidance of $15.5-15.7 billion, which the market seems to be anchoring to. The firm expects BAC to come in at the bottom end of that range, as the timing of rate cuts may impact the bank’s ability to grow NII sequentially.
Bank of America’s asset-sensitive balance sheet faces initial headwinds from lower rates before it can catch up on lagged deposit repricing, according to the research note. Despite this challenge, Citi believes the second-quarter NII result will be strong relative to guidance of approximately $14.8 billion.
The firm does not expect Bank of America to change its fourth-quarter guidance at earnings, given recent forward curve pricing factors in fewer rate cuts than Citi’s base case, with the key debate likely playing out in the second half of 2025.
In other recent news, Bank of America maintained its net interest income guidance for 2025, forecasting a 6-7% year-over-year growth with a fourth-quarter exit rate of $15.5-15.7 billion. Truist Securities reiterated its buy rating for Bank of America, with a price target of $51.00, following this guidance. Additionally, Bank of America expects second-quarter investment banking fees to be around $1.2 billion, which is below the consensus estimate of $1.5 billion. Fitch Ratings confirmed Bank of America’s ’AA-’ rating with a stable outlook, highlighting the bank’s strong intrinsic profile and disciplined risk management. ABB Ltd (SIX:ABBN). has selected Bank of America and UBS to facilitate a potential spinoff or sale of its robotics unit, with discussions still ongoing. Furthermore, Bank of America, along with other major U.S. banks, is in early talks about issuing a joint stablecoin to counter competition from the cryptocurrency industry. These developments reflect the bank’s strategic moves in various sectors and its ongoing efforts to navigate the current financial landscape.
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