Bank Of America: Upside Potential Still Strong After Q1 2021
Company Update (BAC US) (Buy)
Summary
We significantly raise the estimates in our BAC investment case, having reviewed Q1 2021 results from last Thursday
Net Interest Income already grew on an adjusted basis in Q1; management guided to more growth and lower Expenses to come
BAC can still grow its balance sheet and earnings, unlike JPM; we now expect BAC’s long-term ROTCE to be 16%
Earnings growth opportunities include higher interest rates, loan growth, investment banking expansion and better Efficiency Ratios
With shares at $39.15, we expect an exit price of $54 and a total return of 51% (12.0% annualized) by 2024. Buy
Introduction
We significantly raise the estimates in our Bank of America investment case, having reviewed Q1 2021 results from last Thursday (April 15).
We originally initiated a Buy rating on Bank of America stock on Seeking Alpha in October 2019, and reiterated it multiple times. So far BAC shares have gained 44% (including dividends), slightly ahead of the S&P 500, despite the COVID-19 outbreak.
In this…