Bank of America raised to Buy at Phillip Capital as investment fees surge

Investing.com -- Phillip Capital upgraded Bank of America to Buy from Accumulate on Thursday, highlighting strong growth in investment and brokerage fees, as well as improving net interest income (NII). 

The firm lowered its price target to $45 from $50 but maintained a positive long-term view.

“Upgrade to Buy with a lower target price of US$45 (prev. US$50) due to recent share price performance,” the analysts wrote in a note. 

Despite the trimmed forecast, they said they remain optimistic about Bank of America’s ability to grow earnings through several key levers.

In the first quarter of 2025, Bank of America reported an 11% year-over-year increase in earnings to $7.4 billion. 

While the result was slightly below Phillip Capital’s expectations, it was driven by higher NII and stronger-than-expected investment and brokerage fees. 

The bank also raised its dividend per share by 8% to $0.26 and repurchased $4.5 billion in common stock, up from $2.5 billion in the same quarter a year ago.

NII grew 3% year over year, supported by “lower deposit costs, fixed-rate asset repricing, and higher Global Markets activity,” the analysts said. 

Global Markets sales and trading revenue rose 11% from a year earlier, while asset management fees climbed 8%.

Looking ahead, Phillip Capital expects 2025 growth to be fueled by “continued fixed-rate asset repricing and loan growth recovery,” as well as “continued growth in wealth management fees due to higher capital markets activity” and “higher global markets revenue from the heightened volatility.” 

The firm also noted that expense growth is projected to slow to 2% to 3%.

“We like BAC for its substantial investment and brokerage segment (~18% of revenue) and ability to keep NII stable during volatility,” the analysts concluded.