Shares of Bank of America Corp (NYSE: BAC) have gained more than 10% since October 1st, but Baird & Co warns the momentum won’t sustain in the coming months.
Analyst David George sees a 12% downside
In a research note this morning, Baird’s David George downgraded the stock to “underperform†with an unchanged price target of $42 that represents a 12% decline from here.
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The analyst cited “unattractive†risk/reward and elevated expectations for his bearish call. He agreed that the investment bank has, fundamentally, performed well, but said there were other names with better opportunity than the BofA at the moment.
George, therefore, sees the recent rally in the Bank of America shares as an opportunity to sell. The stock is down about 1.0% on Monday.
Traders disagree on CNBC’s ‘Halftime Report’
On CNBC’s “Halftime Reportâ€, Virtus Partners’ Joe Terranova “completely†disagreed with George’s dovish stance and said the stock was headed for its all-time high of $55 a share in December 2006.
It’s a company that currently has $25.5 billion in excess capital; that’s 7% of its total market cap. It hasn’t even benefitted from loan growth. Net interest income is going to be double digits for the next two years. See you at $55 a share.
Even more bullish on the stock is Peter Najarian, who agreed with Terranova on “Halftime Report†and said shares could go much higher than $55 over the next year. He added:
When you look at its price to book, it’s still very inexpensive. Compare it with something like JPMorgan, Morgan Stanley, and some of those other great names, and you see how inexpensive this stock is right now.
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