Bank of America's ROTCE for the 12-month period ended Sept. 30 was just 6.09%, the lowest among the big four, and the lowest among the 24 components of the KBW Banking Index. Investors are clearly placing a high value on the company's national branch network and continued recovery prospects as home prices continue to rise.

Bank of America CEO Brian Moynihan during a conference presentation on Tuesday said the bank was seeing momentum in its core businesses, with "some decent commercial loan growth," an improved credit card business, improved credit quality and success in selling 500 401-k plans to institutional customers during 2013.

CLSA analyst Mike Mayo in a detailed report later on Tuesday made it clear that he was among the disbelievers in Bank of America's current stock valuation.

Despite having a fantastic market presence that includes half of U.S. households, "strategic missteps have caused the company to fall short," according to Mayo. "Under the current CEO (since 1 January 2010), the share price has underperformed the BKX by 58%, the worst in our universe," Mayo wrote. He was factoring in the epic 58% drop for the shares during 2011, as the company muddled through the mortgage mess inherited in major part from Countrywide Financial, which it purchased in July 2008.

According to Mayo, "investors over the past two years may be more satisfied given better management stability (same two co-COOs), less highly visible mistakes, a stronger foundation (costs, credit, capital), very recent growth in credit cards, a stabilizing margin, approval by the Fed to repurchase shares and a stock price that has almost doubled."

But he continues to rate Bank of America a "sell," because the company "needs a more focused strategy." This includes clearly stating the priorities for each of the company's five business lines, "even if one sentence."

"Moreover, there should be related formal target metrics for outsiders to gauge management's ability to successfully implement these strategies (such as ROE and efficiency targets by business), and a link of these metrics to compensation," the analyst wrote.

May's price target for Bank of America is $12, implying 18% downside for the shares over the next 12 months.

BAC Chart BAC data by YCharts

Interested in more on Bank of America? See TheStreet Ratings' report card for this stock.

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-- Written by Philip van Doorn in Jupiter, Fla.

>Contact by Email.

Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.

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