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Why Most Analysts Rate Bank of America a ‘Buy’

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Analysts are bullish on Bank of America

Wall Street analysts have been bullish on Bank of America (BAC) due to prospects of an interest rate hike and cheap valuations. In a Bloomberg survey of 38 analysts, 29 assigned a “buy” rating to BAC, while nine have rated it a “hold.” The stock currently doesn’t have any “sell” ratings.

The table above lists the 38 brokerage companies that have provided their ratings and price targets for BAC for the next 12-month period. BAC has a consensus target price of $17.3, which implies a one-year upside potential of 34%.

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Punto Casa de Bolsa and Vining Sparks have assigned one-year price targets of $14 and $15, respectively, for Bank of America. These are the company’s lowest targets, implying a return potential of 8% and 15% from the stock’s closing price of $3.01. Guggenheim Securities, Drexel Hamilton Buckingham Research Group, Oppenheimer & Co, and FBR Capital Markets have one-year price targets of $20. These targets are the most bullish on Bank of America, implying return potentials of ~54% over the next 12-month period.

Nomura (NMR), Credit Suisse (CS), and Morgan Stanley (MS) have one-year price targets of $19, $18, and $17, respectively, which imply return potentials of 46%, 38%, and 30%, over the next 12-month period.

ETF exposure

Investors looking for ETF exposure to Bank of America (BAC) could invest in the iShares U.S. Financial Services ETF (IYG) or the SPDR Financial Select Sector ETF (XLF). IYG invests 8.0% of its portfolio in Bank of America while XLF invests 5.4% in the stock.

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