NEW YORK (TheStreet) -- After analyzing this week's bank earnings, I continue with expectations for next week.
Not all banks are built the same and analysts are far from consensus. With the Federal Reserve willing to jump upon command, it's hard to image a bear case thesis holding water in the real world. We know now with talk of QE3 fading that the banks have to be healthy. The question is more of a "what price do I buy at?" versus a "should I buy?"
Here's what to expect next week:
BAC data by YChartsBank of America (BAC)
Bank of America is one of the world's leading financial services companies and serves individuals, small businesses and commercial, corporate and institutional clients across the globe. Bank of America trades an average of 128 million shares per day with a market cap of $146 billion.
52-Week Range: $6.90 to $13.99
Book Value: $20.19
Bank of America is anticipated to report good second-quarter earnings before the market opens on Wednesday.
The consensus estimate is currently 25 cents a share, an improvement of 6 cents (24%) from 19 cents during the same period last year. Estimates from analysts range from a low of 21 cents per share, up to the highest estimate of 29 cents per share. If earnings come in as expected or higher, this quarter will not only beat the same period last year, but also last quarter.
Analysts are taking as much of a stand as many of our elected officials typically demonstrate on key issues. Hold ratings can indicate just about anything; however, I think of holds as one small step above sell ratings, and not in between a buy and a sell. There are 19 out of 32 analysts now rating the company a hold while 10 recommend buying and three recommend selling.
Analysts are increasingly negative; the number of analysts issuing a sell recommendation compared to a month ago increased. Analysts clearly missed a good one. In the last 12 months, the shares have returned a 67% gain. Not bad for a company the analysts don't love.
The shares are all but there, albeit the average analyst target price is $13.63. An improving economy along with financials already reporting strong earnings paints a pretty picture as we approach Bank of America's report.
Shareholders receive 4 cents annually in dividend payments. The yield based on a recent price is small compared to others in the space at only 0.3%. After a 67% gain, it's not surprising that short-sellers aren't targeting this company. Fewer than 2% of shares are shorted, and a signal to buyers that the relative downside risks are small.
The chart looks fantastic. I like the weekly and daily formations. Both time periods give me confidence a break above $14 is on the way, and I wouldn't be a seller here. I can understand investors wanting to take some gains off the table, but I would look to sell covered calls instead of selling.
BAC Revenue Quarterly
data by YCharts