Baird Equity Research Upgraded Bank Of America Corp Stock

Baird Equity Research suggests a Buy on Bank of America stock, while upgrading SunTrust to Neutral.

Bank of America Corp. stock has been raised to Outperform rating, similar to a Byrating at Baird Equity research firm. David A George, Evan Marks and Garrett A Holland, analysts at the sell-side firm revealed the rating upgrade in a research note with a title “From Euphoria to Panic in a Week.”

Investors are recommended to use the current sentiments and pullback in the stock market to shut their short position and buying BofA stocks. Bank of America’s tangible book-value’s discounted valuation shows that the stock has a sufficient margin of growth and safety in its book value. This is believed to increase the shares value in the non-existence of interest rate increase by Fed and until potential growth viewpoint improves.

The report discusses the much addressed problem of undervaluing the interest rate option. Shareholders are suggested to buy bank stocks, however the consensus on increase of increase rate is that it will going to be announced. This shows that the American bank’s net interest income might drop below the quarterly run rate of $10 billion. So as to battle the issue of low interest rate, the bank is looking to adopt cost cutting steps in the coming year and enhance its return. BofA, like other large banks that find it difficult to enhance their bottom line, has been on cost cutting path for quite a long time now.

As much as the regulatory capital is concerned, however it’s less than the bank’s peer, the experts believed that the bank’s shareholders should accept the deliberate pace of capital return. A stock price target of $18 on the company’s stock for the upcoming 12 to 18 months is expected. With the improvement in macro level environment, BofA is most likely to enhance its loan growth and increase its earnings by 25 cents per share, if the interest rate increases by almost 100 basis points.

In news, the research report also upgraded SunTrust Inc. stock to a Neutral. Because of improving loan growth and operating leverage, the bank is recommended to extend its valuation to approximately 13 times the fiscal year 2016 EPS.

Recently, Keefe, Bruyette & Woods upgraded Bank of America. Christopher Mustacio, an analyst now assigns an Outperform rating to the company’s stock with $20 price target.

According to the analysts polled by Bloomberg, 25 suggest a Buy, while only 3 recommend a Sell. The twelve month consensus stock price target stands at $19.36.