MW Bank of America's stock has tumbled enough to look like a buy, analyst says

By Steve Gelsi

Morgan Stanley's Betsy Graseck upgraded Bank of America to overweight and cut Goldman Sachs to equal weight

$Bank of America Corp(BAC-N)$.'s stock has fallen enough this year that it now looks attractive for investors to buy, earning it an upgrade at Morgan Stanley after the big selloff in equities last week.

The move comes before the biggest banks in the U.S. report their first-quarter results, beginning Friday, with JPMorgan Chase & Co. $(JPM)$, Morgan Stanley $(MS)$ and Wells Fargo & Co. $(WFC)$ on deck first.

Bank of America reports results on April 15.

Morgan Stanley analyst Betsy Graseck raised her rating on Bank of America's stock $(BAC.SI)$ to overweight from equal-weight while slashing her price target to $47 a share from $56 a share.

"[Bank of America] has been the worst performing money center bank year-to-date, as market is concerned that Fed rate cuts and a lower belly of the yield curve will weigh on [Bank of America's] net-interest margin expansion story," she said.

But at a valuation of only eight times her 2026 earnings projection for the bank, Bank of America offers an expected return on equity of 11% in the coming year, Graseck said..

Bank of America's stock fell 1.1% in premarket trading on Monday, after tumbling 17.8% over the past two sessions. Through Friday, the stock had dropped 21.8% year to date, while JPMorgan shares have slid 12.3% and Wells Fargo's stock has lost 13.2%.

Bank of America also drew praise Monday from Citi analyst Keith Horowitz, who said the stock currently trades at a "substantial discount" to JPMorgan Chase and Wells Fargo.

"In our view this selloff has created a very attractive entry point for a stock that we believe should be viewed as a defensive name here with strong credit quality and capital," Horowitz said about Bank of America.

While Bank of America drew some praise from Morgan Stanley's Graseck, she also downgraded Goldman Sachs Group Inc. $(GS)$ to equal-weight from overweight.

"Goldman Sachs is the most exposed large cap bank to investment-banking revenues, which we view as having the fastest twitch response within the financials sector to recession risk and deteriorating market conditions, much faster than loan growth at traditional commercial banks," Graseck said.

More than 60% of Goldman Sachs's revenues come from its global-banking and markets unit, she said.

The bank is scheduled to report its first-quarter results on April 14.

Goldman Sachs's stock fell 4.9% in premarket trading on Monday, after sliding 16.4% over the past two days.

Also Read: Is a recession looming? Big banks' earnings could be an early indicator of financial strain.

-Steve Gelsi

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April 07, 2025 08:42 ET (12:42 GMT)

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