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Morgan Stanley: Earnings Loser (Update 1)

"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.

BAC Chart BAC data by YCharts

Interested in more on Bank of America? See TheStreet Ratings' report card for this stock.

-- Written by Philip van Doorn in Jupiter, Fla.

>Contact by Email.

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Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.
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