Is Bank of America Corporation (BAC) Being Underestimated by Analysts?

Analysts at Societe Generale cut their rating on shares of Bank of America Corporation (NYSE:BAC) from Buy to Hold in their opinion released on January 09. Barclays analysts again handed out a Equal Weight rating to BAC stock but they lifted target price for the shares in a flash note to investors on January 02. The price target has been raised from $28 to $35. Barclays, analysts launched coverage of BAC stock with a Equal Weight rating, according to their flash note to investors on January 02. Analysts at Morgan Stanley are sticking to their Overweight recommendation. However, on November 30, they lifted target price for these shares to $30 from $28. Analysts at Morgan Stanley, made their first call for the stock with a Overweight rating, according to a research note that dated back to November 30.

By watching the trading activity of corporate insiders, it will become easier to get a sense of Bank of America Corporation (NYSE:BAC)’s prospects. The earliest insider trade took place on 08/09/2018. Bessant Catherine P parted with a total of 15.82 thousand shares of company at average share price of $31.61. The total for the sales was set at $500.07 thousand. After this transaction, the Chief Ops & Tech Officer account balance stood at 609.31 thousand shares. The stock lost -14.62 percent since that insider sale. On 08/10/2017, Bramble Frank P, Director, sold 86.76 thousand shares at a price per share of $24.16. This removed 2.1 million shares from the insider’s fortune and the stock saw a 11.71 percent rally in value since the news became public. This transaction left 99.92 thousand shares in the Director account. On 04/27/2017, Director Woods Thomas D performed a purchase transaction worth $595.25 thousand. This purchase at $23.81 each has added 25 thousand shares into the insider’s portfolio position. Meanwhile, shares have recorded 13.36 percent increase since the transaction was reported. The insider now is left with 62.06 thousand shares remaining in the account. White Michael D, who performs the Director job, bought 25 thousand shares for $503.5 thousand. The acquisition occurred on 11/21/2016 was priced at $20.14 per share. The share price soared 34.01 percent since the reporting date. White Michael D now left with a stake of 85.65 thousand BAC stock worth $2.31 million after the insider buying.

Bank of America Corporation (BAC) is expected to jump by 27.23 percent over the next 12 months, according to price target estimates compiled by finviz. Meanwhile, they have set a $40-month high price target. This represents a whopping 48.2 percent increase from where shares are trading today. The 12-month median price target assigned by the analysts stands at $34.5, which represents a return potential of 27.83 percent when compared to the closing price of the stock of $26.99 on Tuesday, December 04. The lowest price target for the stock is $28.5 — slightly more than 5.59 percent from BAC’s current share price.

The shares are currently floating around the first support level of $26.37. Below this, the next support is placed in the zone of $25.76. Till the time, the BAC stock trades above this level, bulls have nothing to fear. On momentum oscillators front, ‘RSI’ has touched 40.42 on daily chart, which may remain a cause for concern. If the price breaks below $25.76 level on closing basis, then we may see more profit booking and the stock may show further weakness. On the flipside, hitting the $27.96 mark may result into a pull-back move towards $28.94 level.

BAC shares dropped -1.55 points or -5.43 percent on Tuesday to $26.99 with a heavy trade volume of 103 million shares. After opening the session at $28.32, the shares went as high as $28.32 and as low as $26.73, the range within which the stock’s price traded throughout the day. The firm is left with a market cap of $271 billion and now has 10.03 billion shares outstanding. Bank of America Corporation (BAC) stock has lost -3.23 percent of market value in 21 trading days.

BAC stock has a trailing 3-year beta of 1.27, offering the possibility of a higher rate of return, but also posing more risk. The portion of a company’s profit allocated to each outstanding share of common stock was $2.3 a share in the trailing twelve months. The stock’s value has fallen -8.57 percent year to date (YTD) against a decline of -7.12 percent in 12 month’s time. The company’s shares still trade -18.34 percent away from its 1-year high of $33.05 and 4.29 percent up from 52-week low of $25.88. The average consensus rating on the company is 2, on a scale where 5 equates to a unanimous sell rating. In short, the mean analyst recommendations are calling this stock a buy.

Shares of Bank of America Corporation (BAC) are trading at a P/E ratio of 12.07 times earnings reported for the past 12 months. The industry BAC operates in has an average P/E of 18.6. Its P/E ratio went as low as 12.84X and as high as 42.31 over the 5-year span. Further, it is sporting a 4.23 on the Price-to-Sales ratio. Compare this with the industry average P/S of 7.82. 0 percent is the gross profit margin for Bank of America Corporation and operating margin sits at 67.5 percent. Along with this, the net profit margin is 34.2 percent.

BAC will be showing off its Q4 earnings on January 16. Analysts are forecasting revenue to climb 5 percent to $22.7B in the next fiscal quarter, while earnings are seen soaring by nearly 35.42 percent to $0.65 per share. History has shown that shares in Bank of America Corporation have gone down on 20 different earnings reaction days and are predicted to add 0.02 percent when the company reports upcoming earnings. In last reported earnings results, it earned $0.66 per share, better than the $0.62, adjusted, expected by Thomson Reuters consensus estimate. Revenue was $22.9B, better than the $22.7B analysts expected. Earnings are estimated to increase by 16.9 percent this year, 12.25 percent next year and continue to increase by 20.69 percent annually for the next 5 years.