Bank of America: Citigroup Downgrade Loser

Updated with market close information.

NEW YORK (TheStreet) -- Bank of America (BAC) was the loser among the largest U.S. bank holding companies on Tuesday, with shares declining over 3% to close at $7.98.

The broad indexes all pulled back after Moody's Investor Service cut its sovereign debt ratings for Italy and Spain -- which lost their coveted triple-A ratings -- as well as for Portugal, Slovakia, Slovenia and Malta. Bank stock prices were also weighed-down by some disappointing economic reports, including word from the Commerce Department that U.S. retail sales for January rose 0.4%, short of the expected 0.9% increase expected by economists polled by Thomson Reuters. The December sales figure was also revised, as unchanged from November.

The The KBW Bank Index (I:BKX) declined over 1% to close at 44.32.

Citigroup analyst Keith Horowitz cut his rating on Bank of America's shares to "Neutral" from "Buy," saying that "at current levels the risk/reward tradeoff for BAC is relatively balanced in the near term.

Bank of America's shares have now returned 48% year-to-date, after falling 58% during 2011.

The shares still trade for a significant discount, at 0.7 times tangible book value, according to HighlineFI, but for a relatively high 11 times the consensus 2012 EPS estimate of 71 cents.

Despite the downgrade, Horowitz raised his price target for Bank of America to $8.50, and said that "BAC's recent outperformance reflects the market's increased comfort with its capital position, but at these levels we believe investor focus will shift to earnings, which have been weak."

The analyst said that consensus earnings estimates are "too high," and that his 2012 EPS estimate remained at just 50 cents, while his 2013 estimate of 70 cents was "well below consensus of $1.09."

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