Bank of America shares upgraded by Piper Sandler ahead of earnings report By Investing.com

Bank of America (NYSE:) received an upgrade from “underweight” to “neutral” from Piper Sandler on Tuesday, and the analyst also raised his price target from $37.00 to $42.00. The revision comes as Piper Sandler updates its outlook on the big banks ahead of the upcoming earnings season, which begins this Friday.

The analyst’s decision to upgrade the rating comes on the back of expectations that Bank of America’s net interest income (NII) is expected to bottom out in the second quarter of 2024 and then begin to grow for a sustained period. This forecast suggests a more favorable outlook for the bank’s earnings, leading to the stock’s rating change.

In a statement, the Piper Sandler analyst highlighted the reduced likelihood of Bank of America stock underperformance, which led to the rating upgrade. The revision reflects a reassessment of the bank’s outlook as the financial sector prepares to report quarterly results.

Piper Sandler’s revision of Bank of America shares indicates a shift in expectations for the bank’s near-term financial trajectory. With NII expected to bottom out in the second quarter, the bank is seen as poised for a potential recovery in the periods ahead.

Piper Sandler’s new $42.00 price target suggests a modest upside from its previous target, consistent with the bank’s revised outlook. While the market awaits earnings reports from major banks, Bank of America’s updated rating and price target reflect a more neutral view of the stock’s performance.

In other recent news, major U.S. banks are bracing for lower second-quarter earnings amid credit concerns. Analysts are predicting an increase in provisions for potential losses, particularly in commercial and industrial loans. Despite this, Wall Street’s banking divisions could see a boost as merger and acquisition volume increases. Notably, JPMorgan (NYSE:) is expected to report a 13% drop in earnings per share (EPS), while Goldman Sachs (NYSE:) is expected to more than double its earnings.

At the same time, a trial was resumed against ten major banks, including Bank of America and Citigroup, over a conflict of interest involving the presiding judge. The banks are accused of inflating prices for odd-lot corporate bond deals.

Bank of America also amended its charter to clarify the process for holding shareholder meetings remotely and the voting requirements for certain decisions. This is part of the bank’s regular review of governance documents.

In a separate development, 10 of the world’s largest banks, including Bank of America and Goldman Sachs, agreed to a $46 million settlement in a case alleging they conspired to manipulate the interest-rate swap market. Finally, the Equipment Leasing and Finance Association reported an 11% increase in business equipment loans in the U.S. in May compared with the same period last year.

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InvestingPro Insights

In light of Piper Sandler’s recent update, additional insights from InvestingPro provide a broader perspective on Bank of America’s financial health and future prospects. With a market capitalization of $317.66 billion and a price-to-earnings (P/E) ratio of 13.6, Bank of America presents a value proposition that deserves consideration. The bank’s 2.36% dividend yield is particularly noteworthy for income investors, especially given the company’s history of raising its dividend for the past 10 consecutive years, which demonstrates its financial resilience and commitment to shareholder returns.

InvestingPro’s guidance highlights that Bank of America is a significant player in the banking industry and has maintained dividend payments for an impressive 54 consecutive years. While the bank is trading near its 52-week high, indicating strong recent results, analysts have tempered expectations with downward revisions for the upcoming period. Despite these revisions, the bank has remained profitable over the past twelve months, and analysts predict it will continue to be profitable this year.

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