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Bank of America Corporation Message Board

  • cash_is_king_now cash_is_king_now Apr 21, 2012 5:38 PM Flag

    Credit Suisse: BAC 1Q'12 Earnings: Better Revenues; Capital Improves

    Credit Suisse has BUY rating for BAC.

    BAC 1Q'12 Earnings: Better Revenues; Capital
    Improves

    BAC reported 1Q’12 net income of $653 million or EPS of $0.03.
    Reported results included several one-time items including gains on debt
    and TrupS, equity investment income offset by negative FV adjustments and
    negative DVA. Adjusting reported results for one-time items, we put “core”
    EPS closer to $0.16. Core results come in ahead of CS EPS forecasts of
    $0.10 and the Street at $0.12.

    Top and bottom line results were better. Capital markets revenues were
    better and spread income rebounded q/q with the absence of negative
    hedge results. First quarter expenses came in line with forecasts adjusting
    for $0.9 billion in retirement-eligible compensation costs. Expense control
    will be a key area of focus in 2012 with the New BAC program taking effect.

    Capital ratios posted a strong improvement attributable to RWA
    reductions and capital generation. The Tier 1 common equity ratio
    improved 92 bps q/q to 10.78%. Given capital improvement and positioning,
    management increased its Basel III Tier 1 common equity target range to
    above 7.5% by year-end 2012 from its previous range of 7.25-7.5%.

    Estimates. We are revising our 2012 EPS estimate to $0.75 (from $0.70) to
    reflect better 1Q results. Our 2013 and 2014 operating EPS estimates
    remain unchanged at $1.20 and $1.60. We view the shares of Bank of
    America as attractive trading at about 7x 2012 earnings versus the large cap
    peer average at 8.5x. Streamlining of businesses could lead to further
    strategic dispositions and asset run-off. While near-term headwinds continue,
    BAC has significant opportunities to improve revenue growth in 2012 by repricing.
    Our price target of $11 reflects 9x 2013 earnings and 0.8x TBV.

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    • Concise, clear, accurate analysis.

    • Credit Suisse rates BAC as BUY.

      BAC 1Q'12 Earnings: Better Revenues; Capital
      Improves

      BAC reported 1Q’12 net income of $653 million or EPS of $0.03.
      Reported results included several one-time items including gains on debt
      and TrupS, equity investment income offset by negative FV adjustments and
      negative DVA. Adjusting reported results for one-time items, we put “core”
      EPS closer to $0.16. Core results come in ahead of CS EPS forecasts of
      $0.10 and the Street at $0.12.

      Top and bottom line results were better. Capital markets revenues were
      better and spread income rebounded q/q with the absence of negative
      hedge results. First quarter expenses came in line with forecasts adjusting
      for $0.9 billion in retirement-eligible compensation costs. Expense control
      will be a key area of focus in 2012 with the New BAC program taking effect.

      Capital ratios posted a strong improvement attributable to RWA
      reductions and capital generation. The Tier 1 common equity ratio
      improved 92 bps q/q to 10.78%. Given capital improvement and positioning,
      management increased its Basel III Tier 1 common equity target range to
      above 7.5% by year-end 2012 from its previous range of 7.25-7.5%.

      Estimates. We are revising our 2012 EPS estimate to $0.75 (from $0.70) to
      reflect better 1Q results. Our 2013 and 2014 operating EPS estimates
      remain unchanged at $1.20 and $1.60. We view the shares of Bank of
      America as attractive trading at about 7x 2012 earnings versus the large cap
      peer average at 8.5x. Streamlining of businesses could lead to further
      strategic dispositions and asset run-off. While near-term headwinds continue,
      BAC has significant opportunities to improve revenue growth in 2012 by repricing.
      Our price target of $11 reflects 9x 2013 earnings and 0.8x TBV.

 
BAC
15.81-0.23(-1.43%)Feb 27 4:05 PMEST

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