NEW YORK (
Bank of America
is worth $53 per share broken up, according to Rochdale Securities analyst Richard Bove.
"A series of smaller companies would outperform the conglomerate in every respect. They would have more focused management teams and, in some cases, far more attractive secular outlooks than the parent. The businesses with attractive outlooks would have the opportunity of attaining
price-to- earnings multiples the conglomerate will never reach," Bove writes.
Bove's calculation has Bank of America's investment management unit fetching a whopping 18 times earnings valuation, compared to a current multiple of nine times the entire company's estimated profit for 2011.
Still, by some measures, that number seems conservative. Asset manager
, for example, trades at nearly 21 times its 2011 earnings estimate, although
trades at 16 times earnings.
Bank of America's credit card business would trade at 10 times earnings, Bove argues. That compares to 13.54 times its 2011 profit estimate for
Bank of America's capital markets unit would trade at 10 times earnings according to Bove's analysis.
now trades at 9.27 times 2011 estimates, versus 8.89 times for
Earlier this week, Bove wrote a similar report about
, roughly double where it trades today.
"It is not surprising that the value of this company in parts is worth considerably more than the whole, "Bove wrote in the JPMorgan report, "This is almost always the case for a conglomerate."
What is different this time around, Bove writes, is that there is considerable support for breaking up the largest banks. "Congress is adamant that big banks are bad for the nation. The Administration and regulators agree," Bove writes.
Bank of America shares are down a nickel in midday action to $18.60. The stock is up nearly 24% year-to-date, and has been a bull run this week, stringing together six consecutive positive closes.
Written by Dan Freed in New York