Bank of America Earnings Will Keep Shrinking: Analyst

NEW YORK (TheStreet) -- Bank of America(BAC) earnings estimates have been shrinking, a trend that is likely to continue to be a drag on the stock, argues a report from Stifel Nicolaus published Monday.

Bank of America consensus estimates from First Call for 2013 have fallen to $1.05 from $1.26 at the start of the year, while Stifel's estimate has also dropped to 80 cents.

"We suspect more contraction in the consensus estimate in the coming months as lower operating expenses are slower to materialize than currently expected by the consensus," writes Stifel analyst Chris Mutascio.

The analyst believes the diminished expectations will weigh on the stock, which has already slowed appreciably after roaring out of the gate at the start of the year.

While Bank of America shares gained 46% from the start of the year through last week, versus a 15% rise for the KBW Bank Index, the bank's shares are flat since that time, while the KBW index is up 0.8%.

" With capital levels seemingly no longer the primary issue, we think it will be harder for the shares to outperform in the face of what we believe are lower earnings expectations that are forthcoming," Mutascio writes.

TheStreet's readers are more bullish, according to a recent poll , in which more than 60% of respondents argue the rally is just getting started.

Bank of America shares were off seven cents to $8.06 in early trading on Monday.

-- Written by Dan Freed in New York.

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