Deutsche Bank Downgrades Bank of America (BAC) to Hold
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Deutsche Bank downgraded Bank of America (NYSE: BAC) from Buy to Hold. Analyst Matt O-Connor sees the stock as fairly valued.
"While we don’t view BAC shares as pricey, we also don’t view the valuation as depressed," said O-Connor. "BAC shares now trade at 11x our 2017e, a slight premium to other market sensitive banks and about 65% relative to the S&P 500. Upside to the stock seems increasingly dependent on a pickup in economic activity, higher interest rates, and stronger capital market revenues as more company specific positives (such as good expense mgmt, de-risking of the credit book, and solid capital build) seem priced in."
"Our $17.50 target price assumes BAC shares trade at a 5% premium to our target group multiple for the Market Sensitive banks of ~11x our 2017E given continued execution on expenses, capital and credit. Our target group multiple assumes Market Sensitive banks trade at a ~20% discount to the overall bank group given more regulation, a more volatile business mix and potentially lower long-term growth prospects. Primary downside risks include continued low interest rates, weak capital markets revenues, and an unfavorable political/regulatory landscape," added the analyst.
Shares of Bank of America closed at $17.01 yesterday.
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Create E-mail Alert Related CategoriesAnalyst Comments, Downgrades
Related EntitiesDeutsche Bank, Bank of America, Standard & Poor's
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