Bank of America stock rating upgraded at Phillip Securities

On Thursday, Phillip Securities analyst Glenn Thum raised the stock rating for Bank of America (NYSE: BAC) from Accumulate to Buy, while also adjusting the price target to $45.00, down from the previous $50.00. With a current market capitalization of $282 billion and trading at a P/E ratio of 11.3x, InvestingPro analysis suggests the stock is slightly overvalued at current levels. The revision reflects a response to the bank’s recent share price performance.

Thum revised the full-year 2025 (FY25) estimates downward by 7% due to lower expected fee income, which is somewhat mitigated by reduced provisions for loan losses. The new price target is based on a Gordon Growth Model (GGM) valuation, which assumes a price-to-book value (P/BV) ratio of 1.21 times for FY25 and a return on equity (ROE) of 13%. Current metrics from InvestingPro show the bank maintaining a PEG ratio of 0.68 and an actual ROE of 10%.

Bank of America’s growth prospects for FY25, as outlined by Thum, include increased net interest (NI) from repricing of fixed assets and a recovery in loan growth. Additionally, the bank is expected to see continued expansion in wealth management fees driven by increased capital markets activity. Thum also anticipates higher global markets revenue due to heightened volatility and forecasts a slower increase in the bank’s expenses.

Phillip Securities highlights Bank of America’s strong investment and brokerage segment, which accounts for approximately 18% of its $97.5 billion in annual revenue. The firm is optimistic about the bank’s capacity to maintain stable net interest income amidst market volatility, which contributed to the upgraded rating. For deeper insights into BAC’s financial health and additional ProTips, including dividend history and profit margins, visit InvestingPro.

In other recent news, Bank of America’s earnings and revenue results have been a focal point for several analyst firms. Evercore ISI noted that Bank of America’s first-quarter earnings surpassed expectations, largely due to higher trading revenues and a lower tax rate. This aligns with the views of other analysts who have adjusted their price targets while maintaining positive ratings. Keefe, Bruyette & Woods lowered its price target to $52 but kept an Outperform rating, highlighting a solid quarterly performance with a slight beat in pre-provision net revenue and equities trading.

Meanwhile, RBC Capital Markets adjusted its price target to $45, maintaining an Outperform rating and emphasizing the bank’s robust fundamentals and diversified business model. Truist Securities also reduced its price target to $47, holding a Buy rating, and adjusted its earnings projections for 2025 and 2026 due to a more conservative outlook on investment banking revenues. Piper Sandler lowered its price target to $42, retaining a Neutral rating, after revising earnings per share estimates based on first-quarter results.

These recent developments reflect a cautious yet optimistic view from analysts on Bank of America’s financial health and future prospects. The bank’s management has underscored its financial resilience, with a focus on organic growth and conservative underwriting practices, which are expected to support its performance amid economic uncertainties.

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