Bank of America: Analyst Downgrade Loser

NEW YORK ( TheStreet) -- Bank of America ( BAC) was loser among the largest U.S. banks on Wednesday, with shares declining by 5% to close at $11.43.

The broad indexes all ended with slight gains after Alcoa ( AA) kicked off earnings season after Tuesday's market close by reporting fourth-quarter net income of six cents a share on $5.9 billion in revenue. The bottom line match the consensus estimate among analysts polled by Thomson Reuters, but revenue beat the $5.6 billion estimate.

The KBW Bank Index ( I:BKX) was down 1% to close at 52.89, with winners and losers roughly split.

Shares of Comerica ( CMA) of Dallas were down 1% to close at $31.60, after Oppenheimer Securities analyst Terry McEvoy on downgraded the company to a "Perform" rating from "Market Perform," saying that the recent rise in long-term rates would do nothing for the stock. McEvoy on Wednesday also upgraded KeyCorp ( KEY) to "Outperform" from "Perform," with a price target of $11.00, citing the company's improved geographic strategy. KeyCorp's Shares also pulled back 1% to close at $8.90.

Both of these ratings actions are discussed in more detail in TheStreet's earnings preview for regional banks, as is the Wednesday announcement by PNC Financial Services Group ( PNC) of several one-time items that will lower third-quarter earnings by 47 cents a share. PNC's shares declined slightly to close at $60.17.

Bank of America's Downgrade


Bank of America's shares have now declined by 2% during 2013. The shares rose 110% during 2012, after dropping 58% during 2011.

The shares trade for 0.9 times their reported Sept. 30 tangible book value of $13.48, and for 11.8 times the consensus 2013 earnings estimate of 97 cents, among analysts polled by Thomson Reuters. The consensus 2014 EPS estimate is $1.27.

Bank of America's forward price-to-earnings ratio is rather high when compared to the rest of the "big four" banking club, and even looks high when compared to the high-flying U.S. Bancorp ( USB), which was trading for just 10.8 times the consensus 2013 EPS estimate of $3.08 when the shares closed at $33.27 on Wednesday.

And none of the big four have come close to matching USB's stellar return on average tangible common equity of 21.60%, according to data supplied by Thomson Reuters Bank Insight.

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