This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

Bank of America, Morgan Stanley: Financial Winners

NEW YORK ( TheStreet) -- Bank of America (BAC - Get Report) and Morgan Stanley (MS - Get Report) were the winners among the largest U.S. financial names on Friday, with shares of both companies rising over 5%.

Bank of America's shares closed at $8.80, while Morgan Stanley closed at $17.08.

The broad indexes ended with slight gains, after the U.S. Bureau of Labor Statistics announced that 96,000 jobs were added to the U.S. work force in August, while the unemployment rate declined to 8.1% fro 8.3%, mainly because of a lower labor force participation rate.

The official employment numbers were a disappointment, after ADP reported on Thursday that nonfarm private employers added 201,000 full-time employees during August, increasing from an upwardly revised 173,000 in July.

The KBW Bank Index (I:BKX) rose 2% to close at 49.27, with all but two of the 24 index components ending the week with gains.

Bank of America's shares have now returned 59% year-to-date, following a 58% decline during 2011.

The shares trade for 0.7 times their reported June 30 tangible book value of $13.22, and for ten times the consensus 2013 EPS estimate of 91 cents, among analysts polled by Thomson Reuters. The consensus 2012 EPS estimate is 55 cents.

JPMorgan analyst Vivek Juneja on Thursday said that Bank of America and SunTrust (STI) should see a "sizeable earnings benefit" from rising home prices, since the companies have continued to see elevated expenses from nonperforming loans and repossessed real estate "at the high end at 138% and 95% of 2Q12 EPS, respectively," and that a "5-20% further reduction in residential mortgage related loan losses and repossessed real estate expenses above expectations could add 3-7% to 2013 EPS for Bank of America and SunTrust."

Juneja reiterated his "Overweight" rating for Bank of America, with a price target of $11.50, while upgrading SunTrust to "Overweight" from "Equal Weight," saying that a "0% reduction in other credit related expenses could add 2-5% to '13 EPS," for both companies.

Credit management expenses are particularly high for Bank of America," he said, "with $2.5 bil of expenses led by its $1.2 tril servicing portfolio with 13.5% delinquency ratio," and "recovery in the housing market should reduce problem loans faster (and also staff)."

BAC Chart BAC data by YCharts

Interested in more on Bank of America? See TheStreet Ratings' report card for this stock.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
BAC $15.39 -0.84%
C $51.53 -0.21%
MS $35.73 -1.60%
AAPL $124.43 -1.54%
FB $82.22 -1.18%


DOW 17,776.12 -200.19 -1.11%
S&P 500 2,067.89 -18.35 -0.88%
NASDAQ 4,900.8850 -46.5560 -0.94%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs