Why Zacks? Learn to Be a Better Investor.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating indiv idual securities.
If you wish to go to ZacksTrade, click
OK. If you do not, click Cancel.
Back to top
BofA to Focus on Revenue Growth with Mortgage Issues Settled
BAC FFKT BOFI
On Aug 22, 2014, we issued an updated research report on
Bank of America Corporation ( BAC - Analyst Report) . BofA has finally resolved all the actual and probable civil mortgage claims. The company announced a $16.65-billion settlement deal with the U.S. Department of Justice, a few other regulators and Attorneys General of six states.
Though the settlement amount would hurt BofA’s third-quarter 2014 results, it presently removed a huge litigation overhang. We believe that this would allow BofA to focus on its revenue growth. The company has been facing continued pressure on top line owing to a still low interest rate environment and several regulatory restrictions on fee income. Further, low client activity has been also hurting the revenues.
At the same time, BofA continues to align its banking center network according to its customer needs. The company, while continuing to close/sell branches in markets where growth potential does not meet its criteria, is expanding in markets with strong growth potential. This strategy would also aid in augmenting the bank’s top-line growth.
However, on the flip side, BofA, like other Wall Street biggies, continue to face an increasing number of new regulations. Such changes will likely have a significant impact on the bank’s performance. Also, stricter capital requirement is expected to partially reduce the company’s flexibility with respect to business investments in the medium term.
Over the last 30 days, analysts have been more or less neutral on BofA. For 2014, the Zacks Consensus Estimate declined by a penny to 79 cents per share, while for 2015 it remained stable at $1.51 per share.
BofA presently has a Zacks Rank #3 (Hold). Stocks That Warrant a Look
Some better-ranked banking stocks include City National Corporation , BofI Holding, Inc. ( BOFI - Snapshot Report) and Farmers Capital Bank Corporation ( FFKT - Snapshot Report) . All these stocks carry a Zacks Rank #2 (Buy).