While banking giant Bank of America (BAC) is in little danger from even the worst of market downturns, it may not do quite as well as others in the field. That was what a report from Morgan Stanley’s four-star analyst, Betsy Graseck, predicted, and investors took it to heart. Shares of Bank of America slipped modestly in Monday afternoon’s trading.
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Graseck dropped the rating on Bank of America from Overweight to Equal Weight, noted a CNBC report. But Graseck did not completely deride the stock. Graseck raised the price target from its original $48 to its current $55, which was up about 18% against the closing figure on Friday. Basically, Graseck noted, Bank of America is likely to be behind other banks when the recovery starts for capital markets.
This is particularly the case since other banks are more heavily weighted in favor of capital markets, so they will see a larger upswing. By way of comparison, Graseck pointed out that Citi (C) derives about 32% of its revenue from investment banking and trading. Goldman Sachs (GS) pulls in about 68%. But Bank of America only gets 27% of its revenue from those fields, which means a capital markets recovery is a smaller growth driver.
Giving with One Hand, Taking with the Other
In a separate development, Bank of America demonstrated a rather mixed hand with its customer base. On the one hand, it gave, offering up free access to the Discovery Cube Orange County and the Laguna Art Museum for Bank of America customers. Bank of Americas “Museums on Us” program offers access to 225 different museums in 123 different cities, noted a Patch report. However, as it gave, it also took away.
Bank of America closed another branch in Houston, noted Culture Map, bringing it to 41 locations closed throughout the third quarter of 2024. Bank of America called it part of a “fat-trimming process” as more customers turn to online banking to handle their business.
Is Bank of America a Buy, Hold, or Sell?
Turning to Wall Street, analysts have a Strong Buy consensus rating on BAC stock based on 15 Buys and one Hold assigned in the past three months, as indicated by the graphic below. After a 53.71% rally in its share price over the past year, the average BAC price target of $50.64 per share implies 9.57% upside potential.
