NEW YORK (TheStreet) --Bank of America (BAC) first quarter 2014 analyst estimates are considerably higher than they should be as many analysts still need to update their targets to reflect a multi-billion dollar settlement the bank reached with Fannie Mae (FNMA) and Freddie Mac (FMCC) five days ago.
The size of the settlement, which includes a combination of cash payments and the repurchase of certain disputed mortgage backed securities, is generally stated as being worth about $9.33 billion, according to the Federal Housing Finance Authority, which regulates Fannie and Freddie.
Bank of America has said it will take a charge of 21 cents per share to reflect the settlement. Following the bank's lead, Raymond James analyst Anthony Polini on Monday slashed his estimate to nine cents per share from 30 cents, while reiterating his "outperform" rating on the stock. He noted the average estimate is 28 cents, but added it "likely has not incorporated the settlement."
Polini argues Bank of America still trades at a discount to the nation's 40 largest banks. He has a $20 target price for the stock, based on the assumption that it can trade at 12.5 times 2015 earnings projections. The nation's 40 largest banks trade at 13 times 2015 projections, according to Polini.Bank of America shares were up by 1.15% to $17.17 shortly after the market opened Monday. Follow @dan_freed
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV