"While management has made considerable strides restructuring BAC and reducing the risk profile, core profitability and book value growth have been elusive," Hagerman wrote. On a positive note, the analyst wrote, "to be sure, BAC offers a fair amount of expense leverage going forward. However, the tail risk tied to BAC's legacy mortgage exposure continues to cause investor angst."
Atlantic Equities analyst Richard Staite sees a buying opportunity for investors, saying in a report on Thursday that "we think the restructuring story remains on track and believe quarterly EPS will rise to $0.30 by Q4." All of this improvement, according to Staite, will come on the expense side: "reduction in retirement eligible costs $900m ($0.06/share), reduction in Legacy Asset Servicing cost $500m ($0.03/share), New BAC cost savings $300m ($0.02/ share) and reduced preference share dividends $125m ($0.01/share)."
Bank of America's shares are down 1% this year, after more than doubling during 2012. The shares trade for 0.9 times their reported March 31 tangible book value of $13.46, and for 8,8 times the consensus 2014 EPS estimate of $1.30. The consensus 2013 EPS estimate is 98 cents.