Atlantic Equities cuts Bank of America as the stock is 'now fairly valued' By Investing.com

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Atlantic Equities cuts Bank of America as the stock is 'now fairly valued'

Published Jan 31, 2023 08:46

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Atlantic Equities cuts Bank of America as the stock is 'now fairly valued'

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By Sam Boughedda

Atlantic Equities downgraded shares of Bank of America (NYSE:BAC) to Neutral from Overweight with a price target of $40 per share in a note to clients Tuesday.

Atlantic analysts told investors that, with slowing NII growth and non-II revenues also facing headwinds in 2023, the firm decided to downgrade the stock.

"With NII upside now largely priced in for 2023, attention is starting to turn to potential NIM decline in 2024 and the revenue headwind that presents," explained the analysts.

They stated that management has "retained impressive control on expense growth," but with lower NII growth Atlantic Equities believes it will become harder to deliver meaningful operating leverage.

"We forecast pre-provision profit growth of 14% in 2023 but slowing to 3% in 2024," added the analysts. "Combined with a return to more normalised charge-off rates, we have lowered our forecast ROTE in 2023 and 2024 by c1pp to 15%. With the stock trading on 1.45x 2023 TBVPS, we believe the stock is now fairly valued."

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