Bank of America (BAC) has risen 43% this year, reversing some of the huge losses the stock suffered in 2011. On Tuesday, Citi analyst Keith Horowitz urged investors to put on the breaks, downgrading the shares to Neutral from Buy.
And today Bernstein Research analyst John McDonald added his two cents, making a similar argument to Horowitz’s in downgrading the shares to Market Perform: BAC has benefited from newfound confidence in its capital position, but the stock can’t rise much higher without a real change in the company’s earnings power.
“While we continue to see long-term upside in the shares, we believe it will take time for BAC’s earnings power to recover amid low interest rates, loan runoff, and a long tail to elevated mortgage-related expenses,” McDonald wrote. “After a strong move in large-cap bank stocks so far this year, we prefer banks with the ability to increase capital return in 2012 (such as JPMorgan Chase (JPM) and Citigroup (C)).”
Today, Bank of America is down 0.4%.
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