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NEW YORK (
TheStreet) -- Shares of mega-bank
Bank of America(BAC - Get Report) and insurer
American International Group(AIG - Get Report) were upgraded to hold by
TheStreet Ratings on Wednesday.
Bank of America
"BAC continues to make progress towards resolving its large mortgage issues, particularly involving Countrywide, although there is still work to be done," JPMorgan analysts wrote in a report Tuesday. "Given recent positive progress in resolving mortgage related issues as well as improving capital position, we remain positive on the stock longer-term in light of its valuation at 0.6x tangible book value."
"The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth and compelling growth in net income,"
TheStreet Ratings wrote. "However, as a counter to these strengths, we also find weaknesses including generally poor debt management and a generally disappointing performance in the stock itself."
Bank of America has an estimated price-to-earnings ratio for next year of 7.59; the average among its peers is 8.2. For comparison,
JPMorgan Chase(JPM) has a lower forward P/E of 7.29 and
Morgan Stanley's(MS) forward P/E is 7.87.
Twenty-three of the 37 analysts who cover Bank of America rated it hold. Twelve analysts gave it a buy rating and two rated it sell.
TheStreet Ratings gives Bank of America a
C- grade. The stock has risen 47.12% year to date and is the
best-performing stock in the
Dow Jones Industrial Average year to date.
American International Group
The insurance giant last week reported fourth-quarter net income of $19.8 billion, which included a $17.7 billion gain related to a
deferred tax asset valuation allowance.
"We are raising our price objective on AIG from $32 to $40 per share," Bank of America Merrill Lynch analysts wrote in a report Tuesday. "The increase reflects higher assumed multiples for Chartis and SunAmerica. We believe that AIG has the ability to generate substantial excess capital and capital management activities could accelerate materially over the next several years."
AIG was upgraded to
hold from sell by
"The company's strengths can be seen in multiple areas, such as its compelling growth in net income, attractive valuation levels and notable return on equity,"
TheStreet Ratings wrote. "However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, weak operating cash flow and a generally disappointing performance in the stock itself."
American International Group has a forward P/E of 10.46; the average for full-line insurance companies is 12.33. For comparison, both
Hartford Financial Services Group(HIG) and
CNA Financial(CNA) have lower forward P/Es of 5.56 and 9.91, respectively.
Thirteen of the 18 analysts who cover American International Group rated it hold. Four analysts gave the stock a buy rating and one rated it sell.
TheStreet Ratings gives AIG a
C grade. The stock has risen 26.08% year to date.
-- Written by Alexandra Zendrian
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