Nomura Initiates Coverage on Bank of America
In a report published Thursday, Nomura analyst Steven Chubak initiated coverage on Bank of America (NYSE: BAC) at Buy, with a $19.00 price target.
According to the report, multi-year capital / cost initiatives have prepared BAC for a tougher capital regime, and its strong position supports meaningfully higher payouts vs. peers.
“ BAC's current business mix, improving efficiency, and higher rate sensitivity should support ~15% mid-cycle returns (on required capital) by 2016. Legal costs should remain elevated, but analysis suggests BAC is only moderately under-reserved for remaining Private Label exposure,” the report said.
Some highlights from the report included:
-Long-term ROE potential of ~15% supports TP of $19, or 14% potential upside. -FY13E EPS at $0.89. -FY14E EPS at $1.27.
BAC closed Wednesday at $16.70.
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