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BofA Reaches 52-Week High - Analyst Blog

Posted: 11/20/2013 10:07:00 AM
Referenced Stocks: BAC;BKU;FITB;KEY

Shares of Bank of America Corporation ( BAC ) hit a new 52-week high, touching $15.30 in the first half of the trading session on Nov 19. However, the stock closed the session at $15.20, which reflects a solid year-to-date return of 26.7%. The trading volume for the session was 160.6 million shares.

Despite the strong price appreciation, this Zacks Rank #3 (Hold) banking giant has considerable upside left, given its positive estimate revision over the last 30 days and expected year-over-year earnings growth of 8.25% for 2013.

Growth Drivers

BofA's impressive price performance reflects strong third-quarter 2013 results comprising a positive earnings surprise of 11.1%. Additionally, the company continues to strengthen its balance sheet position as reflected in its improved capital ratios.

On Oct 16, BofA declared third-quarter earnings of 20 cents per share, beating the Zacks Consensus Estimate of 18 cents. Results were aided by substantial reduction in the provision for credit losses and lower non-interest expenses.

Non-interest expenses were $16.4 billion, down 7% from $17.5 billion in the year-ago quarter. Though BofA has been continuously facing litigations, its cost containment program is helping it manage the legal expenses to a large extent.

Provision for credit losses decreased 83% year over year to $296 million. As of Sep 30, 2013, nonperforming loans, leases and foreclosed properties ratio was 2.17%, down 64 bps year over year.

Moreover, BofA has delivered 3 positive earnings surprises in the last 4 quarters with an average beat of 30.13%.

Estimate Revisions Show Potency

In the last 30 days, the Zacks Consensus Estimate for 2013 increased 1.1% to 90 cents per share. However, for 2014, the Zacks Consensus Estimate remained unchanged at $1.33 per share over the same time frame.

Better performing major regional banks worth considering include BankUnited, Inc. ( BKU ), Fifth Third Bancorp ( FITB ) and KeyCorp. ( KEY ). All these stocks carry a Zacks Rank #2 (Buy).

BANK OF AMER CP (BAC): Free Stock Analysis Report

BANKUNITED INC (BKU): Free Stock Analysis Report

FIFTH THIRD BK (FITB): Free Stock Analysis Report

KEYCORP NEW (KEY): Free Stock Analysis Report

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