Oppenheimer: Time For 'Even Newer' Bank Of America

In a report published Thursday, Oppenheimer analysts maintained an Outperform rating on

, while reducing the price target from $22 to $21. While saying that 107 percent of tangible book is "an extraordinarily attractive valuation to buy one of the world's best financial services franchises," the analysts pointed out that the company's 1Q results were "dreadful." Bank of America reported its 1Q EPS at $0.27, short of Oppenheimer's estimate and consensus. The shortfall was mainly on account of pre-provision earnings (PPE), which declined 5.8 percent y/y from $6.2B to $5.9B. In the report Oppenheimer noted, "Management's presentation shows that one can strip the $15.7B of expenses down to $13.3B if one excludes LAS, litigation and "retirement-eligible incentives." We'll concede the LAS and litigation as special, but the "retirement-eligible" is a regular operating expense that we were expecting." Bank of America's management had announced the "New BAC" efficiency program in 2011, but has not created a company with a consistently good efficiency ratio as yet. "We calculate that excluding the special items and LAS, the efficiency ratio increased from 67.2% to 70.2% year over year," the analysts said. The EPS estimate for 2016 has been reduced from $1.69 to $1.49.