UPDATE: Goldman Sachs Maintains Bank of America at Neutral Following Legal Settlement
Goldman Sachs reiterated is Neutral rating and $7 price target on Bank of America (NYSE: BAC) as the company settled a lawsuit with Merrill Lynch investors.
Goldman Sachs said, "BAC has agreed to settle a class-action lawsuit with investors who purchased or held shares at the time of the Merrill Lynch acquisition (related to lack of disclosure around financial condition and 4Q08 losses experienced by Merrill). … The impact to 3Q EPS is expected to be -$1.6bn ($0.8bn reserved for) or $0.10 per share. BAC also announced (1) a non-cash DVA charge of $1.9bn and (2) a $0.8bn charge to income tax for changes in the UK corporate tax rate. These two items equate to another negative $0.18 per share, but both are non-core items and are largely already anticipated by investors, in our view."
Bank of America closed at $8.97 on Thursday.
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