NEW YORK (
Bank of America's
stock has seen
of late, and Wall Street seems to think it can go higher from here.
Despite little significant news to warrant the climb, B of A shares have surged $1.88, or 13%, since Feb. 12, based on Wednesday's close at $16.33. The stock is now up 8.4% year-to-date and has pushed past both its 50- and 200-day moving averages this week.
And while testimony by Federal Reserve Chairman Ben Bernanke on Wednesday reassured the market that interest rates will remain low for an extended period of time, giving financial stocks in general a lift, the rest of the big banks have a ways to go to get on a par with Bank of America.
have all underperformed in comparison to B of A since the start of the year, with all but Morgan Stanley and Citi falling.
If there's a case to be made against Bank of America's sudden rise, one of main arguments has to be that, as a
benchmark measurement of U.S. financial strength and consumer health
, it's strange that the stock would take off now.
Unemployment remains high, the housing market is still struggling, and consumers are too weighed down by debt woes to take on much more.
is hindering banks' ability to earn money on credit card debt, and there promises to be more regulation ahead. Also, uncertainty about the future of big banks was again fueled this week when President Obama reiterated support for the
, which would break up the very enterprise that Bank of America represents.
Beyond these macroeconomic and regulatory issues, Bank of America is still dealing with fallout from the controversial Merrill Lynch merger. While a judge
begrudgingly closed the book
on its Merrill-related dispute with the
Securities and Exchange Commission
earlier this week, hard-charging New York Attorney General, Andrew Cuomo is still
with his case against the bank.
Wall Street analysts, however, are undeterred in their bullishness about the stock. They have been upgrading or initiating Bank of America shares at buy for months, calling it an undervalued gem that will have great exposure to the American economic recovery. The stock is a top pick of quite a few analysts, including those at Raymond James and Morgan Stanley.
Of the 27 analysts currently covering the company, according to Thomson Reuters, 23 have it at buy or strong buy, and the other four are at hold. The sell and underperform ratings categories remain unrepresented, as they have been going back three months. The analysts' median 12-month price target for the stock stands at $21, implying upside of more than 28% from current levels.
The smart money seems to be on board as well. Hedge funds have been piling up on B of A shares, making it the most widely-held stock in their portfolios in late 2009, according to Bank of America-Merrill Lynch research. Traders have been looking for side doors into Bank of America's potential as well, such as devising
to boost profit potential down the line.
In early trading on Thursday, the stock was off 1.2% to $16.14.
Written by Lauren Tara LaCapra in New York