NEW YORK (AP) -- After months of decline, shares of Bank of America Corp. jumped more than 7 percent Thursday to their highest level since November. A Citigroup analyst maintained his "Buy" recommendation on Bank of America. That may have helped the stock rise, but Citigroup also noted the financial risk facing the largest U.S. bank from an array of lawsuits related to its mortgage business and sales of mortgage-backed securities that turned toxic when the housing market collapsed.
Charlotte, N.C.-based Bank of America could suffer between $12 billion and $32 billion in losses from that litigation, Citigroup analyst Keith Horowitz said in a research note. He said the wild card for BofA stock is how federal regulators will view the bank's potential legal liability and how quickly they will require it to replenish its capital cushion against potential losses.
THE BIG PICTURE: Many of Bank of America's headaches stem from its 2008 acquisition of California-based Countrywide Financial Corp., which was a major player in the market for high-risk subprime mortgages. BofA stock lost about half its value last year and fell below $5 a share last month. Some investors and analysts have worried that the megabank could lose market share to rivals amid the economic slowdown.
THE ANALYSIS: Citigroup's Horowitz reduced his estimate of BofA's 2012 earnings by 25 cents, to 50 cents a share, and trimmed his 2013 estimate by 30 cents, to 90 cents a share. He cut the 12-month target share price from $9 to $8.
SHARE ACTION: BofA shares rose 46 cents, or 7.8 percent, to $6.27 in afternoon trading. They have traded between $4.92 and $15.31 over the past 52 weeks.
- Bank of America