+ 0.00
+ 0%
+ 0.02
+ 0.01%
+ 0.03
+ 0.01%
+ 0.00
+ 0%

2 Wall Street Analysts On Bank Of America

April 16, 2015 11:23 am
Share to Linkedin Share to Twitter Share to Facebook Share to Print License More

Bank of America Corp (NYSE: BAC) reported Q1 results on Wednesday and two Wall Street firms commented on the stock following the results.

The bank reported Q1 2015 EPS of $0.27 versus consensus of $0.29 with revenues of $21.4 billion, slightly below consensus of $21.6 billion. Estimize users expected earnings of $0.30 per share and revenue of $21.58 billion.

Morgan Stanley analyst Betsy L. Grasek noted that the company had driven down core expenses and legacy asset costs, however, “investors want to see more.”

Grasek felt that further cuts to expenses could from lowered compensation. The bank’s “compensation expenses to revenue ratio is highest among both money centers and super-regionals (BAC's 2014 ratio was 40 percent vs. median 34 percent at peers) and we believe they have room to bring this down, especially in a low revenue environment.”


The analyst expected that automation and branch consolidation along with reduced employee compensation “should drive BAC's core expense ratio down from 60 percent in 2014 to 59 percent in 2015 and 57 percent in 2016.”

Morgan Stanley maintained an Overweight rating and $20 price target on the stock.

At Barclays, Analyst Jason M. Goldberg noted that “net interest income and fee income both appeared modestly below consensus,” while the bank’s loan loss provision increased.

Goldberg highlighted that parallel run exit may cost the bank 100bps, above the Barclay’s expectation of 75bps, and incremental CCAR costs were expected to be $100 million 2015.

The above factors weighed on the stock, according to Goldberg, however, the analyst expected results to improve in Q2 of 2015. Despite the anticipated improvement, the bank’s 1 percent ROA goal “may not be achieved in 2016.”

Barclays maintained an Equal Weight rating and lowered its price target from $20 to $19.

Bank of America recently traded at $15.92, up 1.8 percent.

For the latest in financial news, exclusive stories, memes follow Benzinga on Twitter, Facebook & Instagram. For the best interviews, stock market talk & videos, subscribe to our YouTube channel.

Related Articles

Morgan Stanley Bullish On Many Banks, But Downgrades Bank Of America, JPMorgan, Goldman Sachs

Morgan Stanley is overall bullish on bank stocks in 2021, but downgraded three of the largest Monday. The Analyst: Morgan Stanley analyst Betsy Graseck issued the following ratings changes among large-cap banks and consumer finance stocks: read more

Warren Buffett Pushing More Cash To Equities; 'Big 5' Stocks Still At The Top

Morgan Stanley: How Bank Investors Can Play 6 Global Themes For 2018

Your Favorite Analyst's Favorite Analyst: Which Sell Side Firm Has The Most Buy Ratings From Its Peers?