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Bank of America Hits 52-Week High: Should You Buy BAC Stock Now?
BACBank of America(BAC) ZACKS·2024-11-26 16:35

Core Viewpoint - Bank of America Corporation (BAC) has reached a new 52-week high of 47.74,withaquarter−to−datestockincreaseof19.747.74, with a quarter-to-date stock increase of 19.7%, outperforming both the Zacks Finance sector and the S&P 500 Index [1][3]. Financial Performance - BAC's total revenues have experienced a compound annual growth rate (CAGR) of 1.6% from 2018 to 2023, while loans have seen a CAGR of 2.2% during the same period [8]. - As of September 30, 2024, BAC's total cash equivalents were 295.3 billion, total debt was 831.6billion,anddepositsinexcessofloansamountedto831.6 billion, and deposits in excess of loans amounted to 855 billion, indicating a strong liquidity position [11][12]. - The bank's Common Equity Tier 1 ratio and total capital ratio were 13.2% and 14.9%, respectively, as of September 30, 2024, well above regulatory requirements [14]. Revenue Drivers - The recent U.S. presidential election results are expected to aid revenues, with an expansionary stance likely to boost loan demand and net interest income (NII) [4][5]. - The Federal Reserve's interest rate cuts are anticipated to support BAC's NII as funding costs stabilize [6]. - Management expects NII to improve sequentially in the fourth quarter of 2024 and expand further next year, supported by efforts to enhance financial centers and digital offerings [7]. Dividend and Share Repurchase - BAC has increased its quarterly dividend by 8.3% to 26 cents per share following the 2024 stress test, maintaining a dividend payout ratio of 33% [15]. - As of September 30, 2024, approximately 22.4billionworthofsharesremainedavailableforrepurchaseundertheauthorization[18].InvestmentBankingPerformance−Theinvestmentbankingsegmenthasfacedchallengesduetosubduedperformanceinunderwritingandadvisoryservices,withadeclineintotalinvestmentbankingfeesin2023[19].−Althoughtherehasbeenarecentrevivalintheinvestmentbankingbusiness,significantimprovementisexpectedtotaketime[20].AnalystSentiment−TheZacksConsensusEstimateforBAC′searningshasseenaslightupwardrevision,projectingearningsof22.4 billion worth of shares remained available for repurchase under the authorization [18]. Investment Banking Performance - The investment banking segment has faced challenges due to subdued performance in underwriting and advisory services, with a decline in total investment banking fees in 2023 [19]. - Although there has been a recent revival in the investment banking business, significant improvement is expected to take time [20]. Analyst Sentiment - The Zacks Consensus Estimate for BAC's earnings has seen a slight upward revision, projecting earnings of 3.27 and $3.65 per share for 2024 and 2025, respectively, indicating a decline of 4.4% for 2024 but growth of 11.6% for 2025 [21]. Conclusion - Rate cuts, expansion of the financial center network, and a solid balance sheet are likely to support BAC's financials, while the incoming administration's expansionary policies may further enhance growth initiatives [22].