Bank of America (BAC) Analysis

Here are some recent analyst views on one of my favorite Dividend Stocks, Bank of America (BAC).

Bear Stearns – Outperform (PT $62), RBC CM – Sector Perform (PT $58), S&P – Strong Buy (PT $63) Yesterday, BAC agreed to acquire private banking institution US Trust from Charles Schwab (SCHW) for $3.3 billion in cash.

Bear Stearns viewed the acquisition positively as it instantly gives the company greater credibility in managing the assets of high net worth individuals. Bear does not view the deal to be that large given it represents only 6-8 weeks of earnings and expect it to be neutral to ~$0.01 dilutive to 2007 EPS, and accretive beginning in 2008. Bear believes that BAC will have the opportunity to make US Trust more profitable as it will eliminate the 3rd parties involved in deposits and lending and restructure its balance sheet to lower its cost of funds. Bear reiterated its Outperform rating and $62 price target.

RBC Capital Markets notes that the while the deal looks expensive (30x YTD earnings, 2.5x book value, 3.5% of AUM), it is strategically sound and will help BAC build out the higher end of its private banking business. RBC CM reiterated its Sector Perform rating and $58 price target. S&P reiterated its Strong Buy rating on BAC, noting that this acquisition falls in-line with BAC’s strategy of expanding its private banking business. S&P viewed the acquisition positively as it instantly gives the company greater credibility in managing the assets of high net worth individuals. Bear does not view the deal to be that large given it represents only 6-8 weeks of earnings and expect it to be neutral to ~$0.01 dilutive to 2007 EPS, and accretive beginning in 2008. Bear believes that BAC will have the opportunity to make US Trust more profitable as it will eliminate the 3rd parties involved in deposits and lending and restructure its balance sheet to lower its cost of funds. Bear reiterated its Outperform rating and $62 price target.viewed the acquisition positively as it instantly gives the company greater credibility in managing the assets of high net worth individuals. Bear does not view the deal to be that large given it represents only 6-8 weeks of earnings and expect it to be neutral to ~$0.01 dilutive to 2007 EPS, and accretive beginning in 2008. Bear believes that BAC will have the opportunity to make US Trust more profitable as it will eliminate the 3rd parties involved in deposits and lending and restructure its balance sheet to lower its cost of funds. Bear reiterated its Outperform rating and $62 price target.

viewed the acquisition positively as it instantly gives the company greater credibility in managing the assets of high net worth individuals. Bear does not view the deal to be that large given it represents only 6-8 weeks of earnings and expect it to be neutral to ~$0.01 dilutive to 2007 EPS, and accretive beginning in 2008. Bear believes that BAC will have the opportunity to make US Trust more profitable as it will eliminate the 3rd parties involved in deposits and lending and restructure its balance sheet to lower its cost of funds. Bear reiterated its Outperform rating and $62 price target.

Leave a Reply

Your email address will not be published. Required fields are marked *