Bank of America Extends Rally on Upgrade - TheStreet

Bank of America Extends Rally on Upgrade

Shares of Bank of America surged again Thursday after Credit Suisse boosted its rating on the company to outperform with a $21 price target.
Publish date:

Updated for latest share price, notes stock's move above $17.



) -- Shares of

Bank of America

(BAC) - Get Report

rose for a fourth straight session Thursday after Credit Suisse lifted its rating on the company to outperform from neutral.

The stock was recently up 3.7% to $16.99, and the shares have been steadily gaining ground

all week

. Thursday's session high of $17.09 marked the stock's first foray above $17 since intraday trading on Oct. 21, and at that level, it was up 13.5% from its 2009 close on New Year's Eve at $15.06.

So far at least, new CEO Bryan Moynihan, who began the week with a

PR blitz

, seems to be getting a positive review from investors. Volume of 208.5 million eclipsed the issue's three-month trailing daily average of 200.7 million.

As part of its outlook on financial institutions for 2010, Credit Suisse said in a note to clients that it's getting "more constructive" on banks, and that its upgrade of Bank of America reflected that view. The firm believes the financials overall are "still cheap," although it acknowledged that the unprecedented level of government involvement since the financial crisis struck in late 2008 has made it difficult to assess valuations.

"Having said that, the fear and risk of severe 'too big to fail' capital rules will diminish if time continues to pass and no new legislation gets enacted," it says in the note. "The key catalyst for the banks will be the end of loan loss reserve builds, and the eventual release of a portion of those reserves, which we predict will be a big driver of EPS growth in 2011/2012."

Credit Suisse, which has a $21 price target on Bank of America, added that its top pick from among the regionals is

Fifth Third Bancorp.

(FITB) - Get Report

, which it rates at outperform with a $15 price target; and that

JP Morgan Chase

(JPM) - Get Report

, rated at outperform with a $54 price target, is its top pick from among the large cap banks along with B of A.

Shares of Fifth Third were surging 5.7% in late afternoon trades after starting the session slow, while JP Morgan's stock was up 1.1% to $44.42.

Bank of America is slated to report its fourth-quarter results on Jan. 20. The current estimate of analysts polled by

Thomson Reuters

is for a loss of 51 cents a share in the December period.

Written by Michael Baron in New York




Dan Frascarelli, manager of the

Lord Abbett Classic Stock Fund

, expects financial stocks to keep rising this year, especially Bank of America.

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