Bank on BofA (BAC)? Barron's Thinks So.
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Price: $56.06 +1.63%
Overall Analyst Rating:
SELL (= Flat)
Dividend Yield: 2.1%
Revenue Growth %: +13.6%
Overall Analyst Rating:
SELL (= Flat)
Dividend Yield: 2.1%
Revenue Growth %: +13.6%
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Bank of America (NYSE: BAC), the international financial powerhouse that began its roots back in 1904 in California as the Bank of Italy, should have seen the worst of their fall, according to Barron's.
They believe, following shares dropping below the $11 price level for the first time in over 18 months, that the risk/reward on the stock is "very attractive."
Following their rebound in 2009, when shares quintupled, investors have been noticing the weak earnings environment and some troubling news tied to the bank. Consequently, shares have trended lower over the last several months.
However, Barron's notes that the shares are now trading below book value (Keefe, Bruyette and Woods pegs it at $12.91), and that the market has priced in what many would assume would be months, if not years, of battling with loan and foreclosure disputes.
Just Tuesday, as noted on Streetinsider.com, Rochedale analyst Richard Bove thought that the ado over any potential Wikileaks fallout may be "overplayed." Bove noted that the stock continued to be driven by "sentiment and not hard numbers."
Of course, the glaring risk to the investment is its contentions with Fannie and Freddie, and the potential billions in liabilities that they may fork out over "representations and warranties it made in mortgages it sold during the subprime boom." New financial and credit card regulations will also impact the bank's ability to earn going forward, but if we've learned anything over the last two years, is that banks know how to make money.
Going back to Wikileaks, founder Julian Assange has said that they have "damning" documents for a major U.S. financial institution. Considering the embarrassment and ridicule that many financial institutions have gone through, and euphoria of paying back TARP money subsided, what else could Wikileaks provide that would change many investors outlook on Bank of America's direction. Do they wear hats inside buildings and kick stray dogs?
Barron's notes that, from a previous article, expecting a fiscal year EPS above $2 in the near future doesn't seem overly optimistic.
With shares trading under book value, and calamity virtually priced in, Barron's believes its a good time to bank on BofA.
They believe, following shares dropping below the $11 price level for the first time in over 18 months, that the risk/reward on the stock is "very attractive."
Following their rebound in 2009, when shares quintupled, investors have been noticing the weak earnings environment and some troubling news tied to the bank. Consequently, shares have trended lower over the last several months.
However, Barron's notes that the shares are now trading below book value (Keefe, Bruyette and Woods pegs it at $12.91), and that the market has priced in what many would assume would be months, if not years, of battling with loan and foreclosure disputes.
Just Tuesday, as noted on Streetinsider.com, Rochedale analyst Richard Bove thought that the ado over any potential Wikileaks fallout may be "overplayed." Bove noted that the stock continued to be driven by "sentiment and not hard numbers."
Of course, the glaring risk to the investment is its contentions with Fannie and Freddie, and the potential billions in liabilities that they may fork out over "representations and warranties it made in mortgages it sold during the subprime boom." New financial and credit card regulations will also impact the bank's ability to earn going forward, but if we've learned anything over the last two years, is that banks know how to make money.
Going back to Wikileaks, founder Julian Assange has said that they have "damning" documents for a major U.S. financial institution. Considering the embarrassment and ridicule that many financial institutions have gone through, and euphoria of paying back TARP money subsided, what else could Wikileaks provide that would change many investors outlook on Bank of America's direction. Do they wear hats inside buildings and kick stray dogs?
Barron's notes that, from a previous article, expecting a fiscal year EPS above $2 in the near future doesn't seem overly optimistic.
With shares trading under book value, and calamity virtually priced in, Barron's believes its a good time to bank on BofA.
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