Will Bank of America (BAC) Stock Be Helped by Money Market Fund Sale?
NEW YORK (TheStreet) --Bank of America (BAC) - Get Report has agreed to sell responsibility for close to $87 billion in money-market funds and other products to BlackRock (BLK) in one of the largest deals ever in the money market industry, Reuters reports.
Shares of Bank of America are down by 0.12% to $17.04 in pre-market trading on Tuesday morning.
"This transaction is consistent with Bank of America's ongoing efforts to simplify its business, in this instance, by outsourcing certain product manufacturing functions to an industry leader," a company spokesperson told Reuters.
Bank of America will now focus on issuing money market funds from BlackRock and other third-party providers, the spokesperson continued.
Terms of the transaction were not disclosed, but the deal is expected to be completed sometime next year.
BlackRock is expecting the deal to improve its global cash management business by about $285 billion to $372 billion.
Separately, TheStreet Ratings team rates BANK OF AMERICA CORP as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:
We rate BANK OF AMERICA CORP (BAC) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, attractive valuation levels, increase in stock price during the past year, impressive record of earnings per share growth and expanding profit margins. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Commercial Banks industry. The net income increased by 2043.1% when compared to the same quarter one year prior, rising from -$232.00 million to $4,508.00 million.
- After a year of stock price fluctuations, the net result is that BAC's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
- BANK OF AMERICA CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, BANK OF AMERICA CORP reported lower earnings of $0.35 versus $0.91 in the prior year. This year, the market expects an improvement in earnings ($1.43 versus $0.35).
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 3.3%. Since the same quarter one year prior, revenues slightly dropped by 2.8%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- You can view the full analysis from the report here: BAC