UBS Upgrades Bank of America (BAC) to Buy

(Updated - October 2, 2014 7:38 AM EDT)

UBS upgraded Bank of America (NYSE: BAC) from Neutral to Buy with a price target of $20.00 (from $16.80).

Analyst Brennan Hawken commented, "We are upgrading BofA to Buy, as we believe that BofA is well positioned moving forward given its leverage to rising rates, more stable funding base, non-environmental earnings drivers, and capacity to expand its return of capital to shareholders. Specifically, we believe BofA's more stable and sticky funding base enhances its leverage to rising rates, particularly to a move in the short end of the curve. We analyzed BofA's deposit base, with its higher proportion of core deposits and estimate they have a lower deposit beta than other money centers. So we expect that BofA will actually be under less pressure to pass on rate increases to deposit holders resulting in higher long-term earnings power from higher rates."

The firm moved estimates to $0.29 from $0.37 in 2014, to $1.40 from $1.50 in 2015, and to $1.85 from $1.70 in 2016.

For an analyst ratings summary and ratings history on Bank of America click here. For more ratings news on Bank of America click here.

Shares of Bank of America closed at $16.82 yesterday.

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