We’re Upping Our Price Target, Downgrading Our Rating on This Holding
Shares of Bank of America ($BAC) have been a champ of late, rising more than 16% compared to the modest drop put in by the S&P 500 over the last seven weeks. But with the bank finally lifting its quarterly dividend following the results of the Fed’s recent annual stress tests, something other banks did weeks ago, we are nudging our BAC price target to $70 from $65. That puts us a few bucks above the current Wall Street consensus price target of $68, but candidly we expect others to fine tune their targets now that the dividend announcement is out.
Speaking of that dividend announcement, Bank of America has upped its quarterly dividend by 14% to $0.32 per share. The first such dividend is scheduled to be paid on September 25 to investors of record as of September 4.
With our price target revision, we could hang onto our One rating a wee bit longer, but with about 12% upside to that new target, BAC shares once again knocking on the door of being overbought, and the market headed for the usual end of summer doldrums, we’re electing to downgrade our rating to Two. With that in mind, if BAC shares pulled back near $56, that has the potential for us to revisit a One rating.
Should we see investment banking activity perk up along the way, that would give us another reason to revisit things for BAC as well as our current $225 price target for Morgan Stanley ($MS).
More Pro Portfolio:
- Exiting This Healthcare Name Amid Surge
- 29 Signals We’re Tracking Across 11 Portfolio Strategies
- Weekly Roundup: When Earnings, Rates, and Oil Collide
At the time of publication, TheStreet Pro was long BAC and MS.
| Symbol | Price Target |
|---|---|
| BAC | 70 |
