Updated from 10.29 a.m. EST with afternoon market action ad commentary, stock ratios for the "big four" U.S. Banks, and comment from Deutsche Bank analyst Matt O'Connor, and.
NEW YORK ( TheStreet) -- It's been a rough ride so far this year for Bank of America's (BAC - Get Report) investors, but the company is set for a major earnings rebound next year, according to Morgan Stanley analyst Betsy Graseck.
Graseck on Tuesday upgraded Bank of America to an "overweight" rating from an "equal-weight" rating, while raising her price target for the shares to $16 from $13. The new price target represents 37% potential upside from Monday's closing price of $11.72. The analyst raised her 2013 earnings estimate for the company to $1.07 a share from $1.01, and her 2014 earnings EPS estimate to $1.43 a share from $1.30. Looking further ahead, the analyst expects Bank of America's earnings to rise to $1.98 a share in 2015.
Bank of America's shares were up 3.5% in afternoon trading to $12.13, leading the financial sector higher. The KBW Bank Index (I:BKX) was up 2% to 55.73, with all 24 index components showing gains. Financial stocks were also boosted by a report from the Federal Housing Finance Agency that its House Price Index was up 0.7% in February from January, and that house prices in the U.S. were up 7.1% in February from a year earlier. The U.S. House Price index was still 13.6% below its peak in April 2007, right before the housing bubble burst."We see an earnings inflection point based on the convergence of visible cost cutting, rising
A Disappointing First QuarterInvestors were disappointed with Bank of America's first-quarter earnings report last Wednesday, as the company missed the consensus analyst earnings estimate of 22 cents a share. The shares dropped 5% that day. Bank of America reported a first-quarter profit of $2.6 billion, or 20 cents a share, increasing from $732 million, or 3 cents a share in the fourth quarter, and $653 million, or 3 cents a share, in the first quarter of 2012. Pretax results for the fourth quarter had been lowered by $2.5 billion in costs for independent foreclosure reviews, and $2.7 billion in charges related to the company's $10.3 billion settlement of a long-term dispute with Fannie Mae (FNMA) over mortgage repurchase claims.
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