Oppenheimer has raised its price target for Bank of America’s shares (NYSE:BAC) from $49.00 to $50.00, continuing to assign an Outperform rating to the stock. This revision comes in response to Bank of America’s third-quarter 2024 net interest income of $14.1 billion, reflecting a 1.8% increase from the previous quarter. This growth surpassed the anticipated 1.1% rise based solely on day count, suggesting a positive trend that is likely to persist into the fourth quarter of 2024 and beyond.
Despite potential volatility in forward curves, which may introduce some uncertainty in forecasting the net interest income (NII) trajectory, the analyst highlights the broader potential once NII headwinds diminish. The bank’s earnings per share (EPS) for the third quarter were reported at $0.81, exceeding both the analyst’s projection of $0.77 and the consensus of $0.76.
The earnings report included minor special items amounting to approximately $0.2 billion, or $0.02 per share, related to Visa litigation. Adjusting for these items, the EPS could be viewed as reaching as high as $0.83.
The analyst’s assessment indicates groundwork for positive operating leverage, despite capital markets activity falling below typical levels. Recent financial results reveal a strong performance beyond expectations, demonstrating the bank’s resilience amid market fluctuations.
Oppenheimer’s analysis has been centered on Bank of America’s third-quarter performance, particularly in net interest income. The firm’s outlook is confident regarding the bank’s capacity to handle the prevailing economic landscape and tap into potential growth opportunities.
Investors and market observers might interpret the revised price target as an optimistic indication of Bank of America’s financial stability and future prospects, especially considering the bank’s ability to exceed earnings expectations and maintain a robust interest income stream.
Additionally, JPMorgan has maintained its Overweight rating for Bank of America with a price target of $47, citing impressive performance across all markets-related revenues in the third quarter of 2024. This aligns with the bank’s earnings per share of $0.81 and total revenue of $25.5 billion.
Bank of America’s net interest income (NII) has shown a modest increase with further growth anticipated for the fourth quarter of 2024, albeit at a slightly reduced rate excluding trading. The bank also added 360,000 new consumer checking accounts during this period. Evercore ISI increased its price target for Bank of America to $45, noting potential for NII growth and the strength of the bank’s Markets business.
For the third quarter, Bank of America reported an after-tax net income of $6.9 billion and a 2% growth in NII. Looking forward, the bank expects its fourth-quarter NII to surpass $14.3 billion and anticipates enhanced operating leverage as they move into 2025.
Bank of America’s strong performance, as highlighted by Oppenheimer, is further supported by data from InvestingPro. The bank’s market capitalization is a substantial $324.0 billion, reflecting its status as a key player in the financial sector, aligning with InvestingPro’s insight that Bank of America is a “prominent player in the Banks industry.”
The company’s P/E ratio of 15.24 indicates a reasonable valuation, particularly given its recent earnings beat and the positive outlook on net interest income. Furthermore, Bank of America has shown a strong commitment to shareholder returns, having raised its dividend for 10 consecutive years and maintained dividend payments for 54 consecutive years, which could be appealing to income-focused investors.
The bank’s financial robustness is underscored by its profitability over the past twelve months, as noted by InvestingPro. This profitability, along with the positive operating leverage projected by the analyst, suggests a promising future for the bank’s performance. For a deeper analysis, InvestingPro offers additional insights into Bank of America’s financial health and market standing.