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Bank of America Q1 Estimates About 70% High

NEW YORK (TheStreet) --Bank of America  (BAC - Get Report) 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


Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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