Bank of America Receives 6th Downgrade of 2012

NEW YORK ( TheStreet) -- Bank of America ( BAC), which has seen its shares rise 78.6% in 2012 following a dismal 2011, received its sixth downgrade of the year on Tuesday.

Robert Baird analyst David George was the latest analyst to call the cops on Bank of America's party, dropping his recommendation to "neutral" from "outperform." Nonetheless, George lifted his 2012 earnings estimate to 65 cents per share from 50 cents, primarily due to expectations of a strong first quarter.

Explaining the reason for the downgrade, George joined several other analysts in arguing Bank of America must show stronger earnings potential to continue its outperformance.

"We attribute the majority of the stock's outperformance to the notable improvement in capital levels," George stated in his report.

George favors JPMorgan Chase ( JPM) to Bank of America.

"While JPMorgan has also had a nice move of late and doesn't have the risk/reward it did to start the year, we believe JPMorgan shares are more inexpensive on 2013 EPS ex-reserve release, and there is a much clearer and less risky path to mid-cycle or normalized earnings," he wrote.

In addition to its six downgrades, Bank of America has received one upgrade in 2012--from Morgan Stanley analyst Betsy Graseck. However, while Graseck deserves kudos for raising her Bank of America recommendation to "overweight" on Jan. 19 when the shares were worth $6.80, her decision to leave her price target unchanged at $7 now looks less prescient.

By contrast, three of the six analysts who downgraded Bank of America, including George, lifted their target prices at the same time as they lowered their recommendation. Not one of the seven analysts who have shifted their recommendation has a target price higher than $10, however, according to Bloomberg data.

Bank of America shares closed at $9.93 on Monday but were lower in premarket trading less than two hours before Tuesday's open. JPMorgan shares, meanwhile, were set to open flat to slightly higher on Tuesday.

-- Written by Dan Freed in New York.

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