Wells Fargo on Bank of America (BAC): 'A turn in NII should lead to positive operating leverage...'
Wells Fargo analyst Mike Mayo reiterated an Overweight rating and $44.00 price target on Bank of America (NYSE: BAC).
The analyst comments "Headwinds now closer to tailwinds. BAC now expects NII (which beat) to inflect post 2Q24 given deposit pressure easing, better loan spreads, and less rate cuts; and for consumer loan losses to level off in 2024 given early stage delinquencies. All eyes on NII. NII increased QoQ vs. a prior guide for a decline, w/expectations for 2Q24 as the low point. Several factors help. First, deposits increased and there is a slowdown in the rate of interest paid on deposits (most rate-seeking behavior seems done). Second, loan spreads widened (utilization modestly better in com'l). Expected decline in 2Q24 is seasonal given Wealth (tax payments). A turn in NII should lead to positive operating leverage and YoY EPS growth 1-2 qtrs. thereafter."
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Shares of Bank of America closed at $34.68 yesterday.