(Bloomberg) - Wall Street is the most bearish on Bank of America Corp. since 2015 after the bank received its fourth analyst recommendation downgrade in a month.
Keefe, Bruyette and Woods analyst David Konrad became the latest to cut Bank of America, saying its valuation is “expensive for an environment that may face more revenue risk than a severe credit downturn,” in a note Wednesday after market close. The bank’s consensus analyst rating has fallen to its lowest score in more than seven years, according to data compiled by Bloomberg.
Shares of the second-largest US bank by market value are trading above historical price-to-earnings multiples and at a 5% premium to JPMorgan Chase & Co., and a 16% premium to super-regional banks such as Signature Bank or KeyCorp, Konrad wrote.
Bank of America shares fell as much as 1.7% on Thursday. The stock is up about 9% so far this year after falling 26% in 2022.
A key driver to Bank of America’s growth is net interest income, a source of revenue for lenders. “The catalyst for NII has come and gone,” and after a surge in 2022, the metric fell in the fourth quarter, and is forecast to continue falling in 2023, Konrad wrote.
Konrad’s concerns echo those expressed by Piper Sandler & Co. analyst R. Scott Siefers, who gave the bank its only other sell-equivalent rating last month after the bank flagged a slowdown in lending, noting that Bank of America has a “cloudier outlook” than its peers. Siefers’s downgrade on Jan. 17 set off other cuts, including Konrad’s underperform from market perform, in the last four weeks.
Bank of America currently has 13 buys, 11 holds and 2 sells, with an average analyst price target of $40.51, according to data compiled by Bloomberg.
(Updates with Thursday trading.)
By Maxwell Zeff
With assistance from Felice Maranz
