This Day On The Street
Continue to site
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

Bank of America Earnings Won't Keep Shares Past $10

NEW YORK ( TheStreet) -- Bank of America (BAC - Get Report)'s first quarter earnings are expected to get a lift from strong fixed income trading activity when the bank reports April 19, but investors will need to see stronger evidence of a sustained earnings turnaround at the bank to lift the shares meaningfully past the $10 mark.

Consider, for example, Baird Equity analyst David George, who downgraded Bank of America in a note published Tuesday even while upping his 2012 earnings estimates to $0.65 from $0.50 mainly due to expectations of a strong first quarter.

George and his colleagues explained the discrepancy in the note by stating that they "do not believe the intermediate-term earnings outlook justifies putting new money to work in the stock."

The latest bearish Bank of America call came from London-based Robert Murphy of HSBC, who initiated coverage on Bank of America Wednesday with an "underweight" recommendation and a $6.20 price target, according to Bloomberg. Murphy's report could not be obtained.

9 Oil, Gold Stocks That Rise on Bad News

Analysts as a group are looking for Bank of America to earn 12 cents per share on revenues of $22.77 billion, according to Thomson Reuters data. The most bearish estimate calls for a break-even quarter, while the biggest bull is looking for a 20 cent per share gain. In the first quarter of 2011, Bank of America earned 17 cents per share on revenues of $26.88 billion.

Despite a consensus view that securities dealers will post strong first quarter numbers, Bank of America has suffered six downgrades year to date as many analysts conclude the more than 75% rally year to date leaves little room for additional upside.

Evercore analyst Andrew Marquardt sounded a similar note in a March 23 downgrade of Bank of America shares.

"While this quarter may prove better than some expect in terms of capital markets rebound (albeit off easy comps from last quarter), we remain skeptical on the core earnings power longer-term in its ultimately achieving [pretax pre-provision] earnings in the $45-50b range (which is already reflected in our 'norm' EPS of $1.95/share)," Marquardt wrote.

10 Mid-Cap Stocks That Have Almost Doubled in 2012

Nonetheless, Marquardt cited "significant expense levers" in his report, and layoffs are expected to be a big contributor. Bank of America had 282,000 full time employees at the end of 2011, according to its 10-K filing last month--down just 2,000 from the end of 2009.
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
Only $9.95
14-Days Free
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
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
BAC $14.36 -2.80%
AAPL $95.24 1.70%
FB $117.58 -0.83%
GOOG $694.99 -0.46%
TSLA $234.96 -2.80%


Chart of I:DJI
DOW 17,759.53 -131.63 -0.74%
S&P 500 2,066.94 -14.49 -0.70%
NASDAQ 4,782.9590 -34.6350 -0.72%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs