UBS Maintains a 'Neutral' on Bank of America (BAC); Improving Sentiment, but Weak Earnings

UBS maintains a 'Neutral' on Bank of America (NYSE: BAC) price target raised from $6 to $7.

UBS analyst says, "Excitement seems a bit overdone: BofA upped its Basel III Tier 1 target by 50 bps for year-end 2012, and given concern around BofA’s capital position, the strong relief rally in BAC shares on the back of this improved forecast makes sense. However, BofA’s near-term earnings power remains highly uncertain, and in our view, this means BAC shares could remain volatile."

"Could the mortgage servicing settlement finally happen?: BofA incurred a $1.5 billion litigation loss, with the majority related to the pending state AG mortgage servicing settlement. To us, this implies both that a settlement may finally be drawing near and BofA is likely well reserved for the most likely outcome. Both of these implications are positives for BofA, in our view."

UBS lowers FY12 EPS estimate from $0.88 to $0.75 and FY13 from $1.10 to $1.00

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 $6.96 yesterday.

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