Analysts are bullish on Bank of America
Wall Street (SPY) analysts have been bullish on Bank of America (BAC) shares on prospects of an interest rate (TLT) hike and cheap valuations. In 2Q16, BAC generated a return on assets of 0.78% and a return on equity of 6.5%.
But if interest rates go up, BAC’s profitability will likely improve, and the stock has significant upside potential. The company’s strengths are its expanding profit margins and notable return on equity.
In a Bloomberg survey of 38 analysts, 29 of them (or 76%) assigned a “buy rating to BAC. Nine of them (or 24%) rated it a “hold.” The stock has received no “sell” ratings.
Target price and upside potential
The table above lists the 38 brokerage companies that have provided ratings and price targets for BAC for the next 12-month period. BAC has a consensus target price of $17.13, resulting in a one-year upside potential of 18%.
You can also see that most analysts have maintained their ratings in the last one month. FBR Capital Markets with a one-year price target of $20 is the most bullish on Bank of America (XLF). This implies a return potential of ~38% over the next 12-month period, based on Bank of America’s closing price of $14.48 on Friday, August 5, 2016.
Punto Casa de Bolsa and Berenberg have assigned a one-year price target of $14 and $15, respectively, for Bank of America. These are BAC’s lowest target prices. This implies a return potential of -3.3% and 3.6%, respectively.
Last week, analysts at Robert W. Baird reiterated their “outperform” rating for Bank of America. Credit Suisse (CS) also reiterated a “buy” rating in its post-earnings report. They have a price target of $18, implying a return potential of 24%. Nomura (NMR) is also bullish on Bank of America.