On Mar 11, 2013, we reiterated our long-term recommendation on
Bank of America Corporation
) at Neutral. This reflects BofA's fourth-quarter results, which
were marginally ahead of the Zacks Consensus Estimate.
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BofA's fourth-quarter earnings of 3 cents per share beat the
Zacks Consensus Estimate by a penny. Better-than-expected results
were primarily driven by significant slowdown in provision for
credit losses and a decline in operating expenses, partly offset
by lower top-line growth.
Following the fourth-quarter results, the Zacks Consensus
Estimate for 2013 has remained stable at $1.00 per share over the
last 60 days. The Zacks Consensus Estimate for 2014 advanced 3.1%
to $1.31 per share, in the same time frame. Hence, BofA now has a
Zacks Rank #3 (Hold).
BofA remains focused on maintaining steady capital levels. This
is further evident from the clearance of the 2013 stress test.
Further, BofA has been relentlessly trying to realign its balance
sheet in accordance with the regulatory changes post the meltdown
to remain afloat. All these initiatives are expected to go a long
way in improving the company's financials in the subsequent
Yet, BofA's elevated cost structure remains a cause of concern.
Moreover, the company still faces numerous litigations pertaining
to Countrywide Financial, which are expected to have a material
impact on its financial stability going forward. We are also
concerned about the company's top-line growth, which continue to
be impacted by the low rate environment and sluggish economic
Other Major Banks Worth Considering
While we prefer BofA, other major banks worth a look include
State Street Corporation
). While the first stock carry a Zacks Rank #1 (Strong Buy),
other two retain a Zacks Rank #2 (Buy).