Good news all around for Bank of America (NYSE:BAC), as Seaport Research Partners analyst James Mitchell upgraded the major bank from Neutral to Buy. Mitchell also set the new price target at $48 per share, which represents a 12.5x multiple on 2025 earnings per share. That’s up from the original projection of 10.4x. Growth rates are expected to rise, going from 0% for the second quarter to 2% during Fiscal Year 2024. Meanwhile, it’s expected to add 7% in 2025.
While not everything was perfect—Mitchell cited unusually high asset sensitivity and uncertainty when it came to the maturation rates of hedges—there was quite a bit to be optimistic about. In fact, changes in short-term bank yields offered growth while customer deposits were actually on the rise. In addition, the higher-for-longer interest rate environment should benefit the bank by allowing it to earn more interest income.
It’s worth noting that, so far, Mitchell has enjoyed a 64% success rate on his ratings, with an average return of 7.9% per rating.
Customer Service Problems
However, there are some customer service issues that may prove to be a drag on Bank of America down the line. The first is a rising rate of branch closures, which will be a problem for older folks and those who prefer contact with their bankers. Bank of America already announced closures in California and Florida, and now, several Texas branches will be on the block.
A further report suggests that some folks in North Carolina had money garnished by Bank of America but without reason. Several customers reported garnishments in the multi-thousand dollar range, with little explanation or reason. Bank of America hasn’t commented much on this one, but it’s a safe bet that an investigation is underway in response.
Is Bank of America a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on BAC stock based on 13 Buys, six Holds, and one Sell assigned in the past three months, as indicated by the graphic below. After a 43.09% rally in its share price over the past year, the average BAC price target of $41.03 per share implies 0.39% upside potential.
