BAC's Investor Day Preview: Focus on Growth Strategy, Lagging Returns

Tomorrow, Bank of America BAC, the second-largest U.S. bank, will host its first Investor Day since 2011. The event will feature presentations from CEO Brian Moynihan and other top executives, who are expected to outline strategic priorities, growth opportunities and performance across major business segments.

Management is likely to address investor concerns over BAC’s underperformance versus peers, such as JPMorgan JPM, Wells Fargo WFC and Citigroup C. Over the past five years, BAC shares have lagged these competitors. 

5-Year Price Performance
 

Executives are expected to provide details on plans to accelerate loan growth, expand digital banking and strengthen wealth management and investment banking (IB) operations. Bank of America is likely to set a target for Return on Tangible Common Equity, with the aim of lifting it above the current 15% level over the medium term.

Further, discussions will likely include the impact of prior investments in long-dated Treasuries that have weighed on earnings since the Federal Reserve began raising rates in 2022. However, management anticipates sustained net interest income (NII) growth of 6-7% annually for 2025-2026, supported by improving loan demand and deposit stability amid declining interest rates.

Additionally, BAC is expected to outline initiatives to boost fee-based revenues and narrow competitive gaps in IB and wealth management businesses. At present, these divisions at JPMorgan, Wells Fargo and Citigroup are performing well, thus supporting the top-line growth.

Overall, the event should offer clearer insight into Bank of America’s roadmap for improving profitability, efficiency and shareholder return.

Bank of America’s Valuation Analysis & Estimates

From a valuation standpoint, Bank of America trades at a 12-month trailing price-to-tangible book (P/TB) of 1.93X, below the industry’s 3.21X. Further, the stock is trading at a discount compared with JPMorgan’s 3.11X and Wells Fargo’s 2.09X. On the other hand, it is expensive compared with Citigroup’s 1.10X.

P/TB Ratio
 

The Zacks Consensus Estimate for Bank of America’s 2025 and 2026 earnings implies year-over-year growth of 14.9% and 14.5%, respectively. In the past month, earnings estimates for 2025 and 2026 have increased to $3.77 and $4.31, respectively.

Earnings Estimates Trend
 

Bank of America currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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