Bank of America stock fell 3.1 percent in pre-market trading today after the company reported its second-quarter results. Bank of America reported higher-than-expected second-quarter numbers. A significant jump in the provision for credit losses weighed on the bank’s profitability.
Bank of America’s Q2 earnings
In the second quarter, Bank of America reported an adjusted EPS of $0.37 compared to $0.75 in the second quarter of 2019. The earnings beat analysts’ consensus estimate of $0.27 per share. Bank of America generated sales of $22.5 billion—a reduction of 3.4 percent from the second quarter of 2019. The company beat analysts’ consensus sales estimate of $22.0 billion. The provision for credit losses rose to $5.1 billion—up about $4.0 billion from the same quarter the previous year.
In the second-quarter earnings release, Bank of America CEO Brian Moynihan said, “Strong capital markets results provided an important counterbalance to the COVID-19-related impacts on our Consumer business, and our industry-leading digital capabilities allowed us to support clients amid difficult working conditions.”
Currently, analysts expect a 5.67 percent and 0.01 percent fall in Bank of America’s 2020 and 2021 sales, respectively. Analysts also expect an adjusted EPS of $1.44 and $2.20 in 2020 and 2021, respectively.
Bank of America peer comparison
In the second quarter, Morgan Stanley reported revenues of $13.4 billion—30.9 percent growth from $10.2 billion in the second quarter of 2019. Morgan Stanley beat analysts’ consensus estimate of $10.3 billion. The company’s adjusted EPS of $1.96 was above analysts’ estimates of $1.12 per share in the second quarter. However, the company reported a non-GAAP EPS of $1.23 in the second quarter of 2019.
In the second quarter, Goldman Sachs reported revenues of $13.3 billion—40.5 percent growth from $9.5 billion in the second quarter of 2019. The company beat Wall Street analysts’ consensus estimate of $9.7 billion. Goldman Sachs’ adjusted EPS of $6.26 was above analysts’ estimates of $3.78 per share in the second quarter. The company reported a non-GAAP EPS of $5.81 in the second quarter of 2019.
Analysts’ recommendations for Bank of America stock
Among the 27 analysts tracking Bank of America stock, 15 recommend a buy—unchanged from the previous month. Twelve analysts recommend a hold—up from 11 in the previous month. None of the analysts recommend a sell. Analysts have an average target price of $28.53 on Bank of America. The target price implies a return of 16.0 percent based on the closing price of $24.60 on Wednesday. The consensus target price for the stock has risen from $27.72 in June—a rise of 2.9 percent.
Morgan Stanley and Goldman Sachs have average broker target prices of $54.15 and $243.08, respectively. These figures imply returns of 5.5 percent and 12.1 percent, respectively, over the next 12 months.
Bank of America's stock performance
Bank of America stock rose 1.9 percent on Wednesday and ended the day at $24.60. At this closing price, the company’s market cap is $213.4 billion. The stock is trading 31.1 percent below its 52-week high of $35.72 and 37.1 percent above its 52-week low of $17.95. The stock has fallen by 30.2 percent year-to-date.
On Wednesday, Bank of America stock was trading 2.8 percent above its 20-day moving average of $23.92. The stock is trading 1.9 percent above its 50-day moving average of $24.14 and 3.8 percent above its 100-day moving average of $23.71.
Bank of America has an upper Bollinger Band level of $25.48, while its lower Bollinger Band level is $22.48. On Wednesday, the stock closed near its middle Bollinger Band level of $23.98, which suggests that it’s neutral.