Bank Watch

Why hasn’t BofA’s stock fallen as much as its peers’ this week?

Various analysts this week announced upgrades of Bank of America’s shares, a likely reason the lender’s stock price hasn’t fallen this week as much as that of its peers. But for the year, Bank of America’s shares are down about 15 percent, while the KBW Bank Index, which tracks share performance of 24 large U.S. lenders, is down about 9 percent.
Various analysts this week announced upgrades of Bank of America’s shares, a likely reason the lender’s stock price hasn’t fallen this week as much as that of its peers. But for the year, Bank of America’s shares are down about 15 percent, while the KBW Bank Index, which tracks share performance of 24 large U.S. lenders, is down about 9 percent. Bloomberg

Bank of America’s share price, like that of many other companies, is down this week, as concerns over China’s economy continue to pummel Wall Street and fuel a sell-off of U.S. stocks.

Shares of the four largest U.S. banks have tumbled at least 5 percent this week. But after the stock markets closed Tuesday, I noticed that Bank of America’s slide is the smallest this week among the four.

What’s the likely reason for that? Perhaps it’s because various analysts this week announced upgrades of the Charlotte-based lender’s shares, citing both the sell-off in U.S. stocks as well as uncertainty about when the Federal Reserve will raise interest rates.

Analysts John McDonald and Grant D’Avino, of Sanford C. Bernstein & Co., wrote Tuesday that the sell-off creates an attractive opportunity for investors to buy shares of Bank of America. The analysts described the bank as a “recovering franchise” and noted its potential to benefit from higher interest rates. They boosted their rating on the lender to “outperform” from “market perform.”

Also Tuesday, analysts with Robert W. Baird upgraded Bank of America from a “neutral” rating to “outperform.” Baird told investors that it recommends they buy bank stocks when most people believe interest rates will never rise. (The recent stock market turmoil has cast more uncertainty over when the Fed will raise interest rates.)

On Monday, analysts with Keefe, Bruyette & Woods upgraded Bank of America to “outperform” from “market perform,” as they mentioned investors who have been buying bank stocks on the expectation that interest rates will rise. The analysts said removing those shareholders could be a good thing for “value investors,” meaning those who buy shares because of the fundamental worth of a company.

Bank of America’s shares closed at $15.26 on Tuesday, down 5.2 percent from their closing price on Friday. Over the same period, shares of Wells Fargo are down 7.3 percent, shares of Citigroup are down 6.9 percent and shares of JPMorgan Chase & Co. are down 5.8 percent.

On Tuesday, analysts at CLSA upgraded JPMorgan from “outperform” to “buy.”

Bank of America’s stock performance this year continues to lag that of its peers. The bank’s shares are down about 15 percent, while the KBW Bank Index, which tracks share performance of 24 large U.S. lenders, is down about 9 percent.

  Comments