Bank of America (NYSE:BAC) Trading Down 2.7% - Should You Sell?

Key Points

• Bank of America shares fell 2.7% to $57.89 on unusually heavy trading volume, extending a decline of about 7% over the past month.
• The main concern is a projected slowdown in third-quarter investment-banking fees to roughly $1.6 billion–$1.8 billion, below the approximately $2 billion reported a year earlier. This has raised questions about whether the capital-markets boom is losing momentum.
• Despite the pressure, the latest quarter exceeded expectations with $1.21 in EPS and 19.6% year-over-year revenue growth, while analysts maintain a “Moderate Buy” consensus and the company increased its quarterly dividend to $0.32.

Shares of Bank of America Corporation (NYSE:BAC) fell 2.7% during trading on Wednesday . The stock traded as low as $57.18 and last traded at $57.89. 49,067,230 shares changed hands during trading, an increase of 32% from the average daily volume of 37,151,699 shares. The stock had previously closed at $59.52.

Key Bank of America News

Here are the key news stories impacting Bank of America this week:

• Positive Sentiment: Analyst support remains a stabilizing factor. Barclays maintained a Buy rating on BAC, although other analysts remain more cautious following the weaker fee outlook. Barclays Remains a Buy on Bank of America
• Positive Sentiment: Management says the broader business remains healthy. Bank of America’s CFO sought to reassure investors that underlying operations are sound, while the bank’s latest reported quarter showed $1.21 in earnings per share, revenue growth of 19.6% year over year, and results above analyst expectations. Bank of America CFO Claims All Is Well as Stock Slides 7% in a Month
• Neutral Sentiment: Merrill launched two client-investment services for tax-efficient portfolio transitions and systematic cash investing. The initiatives could support wealth-management growth, but their financial impact is likely to develop gradually. Merrill Launches New Services
• Negative Sentiment: The primary pressure is the expected slowdown in Wall Street revenue. Management projected third-quarter investment-banking fees of approximately $1.6 billion to $1.8 billion, below the roughly $2 billion generated a year earlier, while trading revenue is expected to be little changed. Investors are questioning whether the recent capital-markets boom is losing momentum. Bank of America CEO Sees at Least 10% Drop in Q3 Investment Banking Fees
• Negative Sentiment: Valuation has become a concern after the prior rally. Commentary notes that BAC has risen substantially from its 52-week low and now trades at a valuation that leaves less room for disappointing revenue guidance. The stock has also fallen about 7% over the past month, despite remaining above its 200-day moving average. Is Bank of America Stock a Buy, Sell, or Hold After a 25% Run Off Its 52-Week Low?

Analyst Ratings Changes

BAC has been the subject of several recent analyst reports. Argus set a $70.00 target price on shares of Bank of America in a report on Wednesday, July 15th. Barclays boosted their price objective on Bank of America from $71.00 to $72.00 and gave the company an "overweight" rating in a research report on Wednesday, July 15th. JPMorgan Chase & Co. upped their price objective on Bank of America from $62.50 to $68.00 and gave the stock an "overweight" rating in a research note on Wednesday, July 29th. Evercore set a $63.00 target price on Bank of America and gave the stock an "outperform" rating in a research report on Monday, July 6th. Finally, Keefe, Bruyette & Woods lifted their target price on Bank of America from $67.00 to $70.00 and gave the company an "outperform" rating in a research note on Wednesday, July 15th. Twenty-one investment analysts have rated the stock with a Buy rating and six have issued a Hold rating to the company's stock. Based on data from MarketBeat, the company currently has an average rating of "Moderate Buy" and a consensus price target of $64.08.

Bank of America Stock Performance

The business has a 50 day moving average of $62.07 and a 200 day moving average of $55.70. The company has a market capitalization of $404.81 billion, a P/E ratio of 13.28, a price-to-earnings-growth ratio of 0.95 and a beta of 1.15. The company has a quick ratio of 0.82, a current ratio of 0.83 and a debt-to-equity ratio of 1.23.

Bank of America (NYSE:BAC - Get Free Report) last released its quarterly earnings data on Tuesday, July 14th. The financial services provider reported $1.21 earnings per share (EPS) for the quarter, topping analysts' consensus estimates of $1.13 by $0.08. The business had revenue of $31.56 billion for the quarter, compared to the consensus estimate of $30.78 billion. Bank of America had a return on equity of 12.20% and a net margin of 17.56%.The company's revenue was up 19.6% compared to the same quarter last year. During the same quarter in the previous year, the company posted $0.89 EPS. On average, sell-side analysts predict that Bank of America Corporation will post 4.67 earnings per share for the current year.

Bank of America Increases Dividend

The firm also recently declared a quarterly dividend, which will be paid on Friday, September 25th. Investors of record on Friday, September 4th will be given a $0.32 dividend. This is a boost from Bank of America's previous quarterly dividend of $0.28. This represents a $1.28 annualized dividend and a yield of 2.2%. The ex-dividend date is Friday, September 4th. Bank of America's dividend payout ratio (DPR) is presently 29.36%.

Hedge Funds Weigh In On Bank of America

Several institutional investors have recently bought and sold shares of the business. Handelsbanken Fonder AB raised its holdings in shares of Bank of America by 53.0% during the 4th quarter. Handelsbanken Fonder AB now owns 4,629,553 shares of the financial services provider's stock worth $254,625,000 after acquiring an additional 1,603,080 shares during the period. Bamco Inc. NY raised its stake in Bank of America by 45.4% during the second quarter. Bamco Inc. NY now owns 40,994 shares of the financial services provider's stock worth $2,336,000 after purchasing an additional 12,794 shares during the period. E Fund Management Co. Ltd. purchased a new position in Bank of America during the second quarter worth about $4,089,000. Bernicke Wealth Management Ltd. acquired a new position in Bank of America in the 2nd quarter valued at about $2,132,000. Finally, Legal & General Group Plc boosted its holdings in Bank of America by 3.4% in the 4th quarter. Legal & General Group Plc now owns 45,411,913 shares of the financial services provider's stock valued at $2,497,655,000 after purchasing an additional 1,487,809 shares during the last quarter. Institutional investors own 70.71% of the company's stock.

Bank of America Company Profile

Bank of America Corporation NYSE: BAC is a diversified financial services company serving individual consumers, businesses, institutional investors and governments. Its operations include consumer banking, credit and debit cards, mortgages, small-business banking, commercial banking, investment banking, securities trading and investment management.

The company provides consumer and wealth-management services through Bank of America and Merrill, including deposit accounts, lending, brokerage, retirement planning, financial advice and private banking.

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