The financials sector will be under the spotlight to kick off earnings season, with Bank of America Corporation (NYSE:BAC) among several bank stocks reporting quarterly results. The firm reports fourth-quarter financial results before the market opens on Wednesday.
Here are the earnings estimates, analyst ratings and key items to watch before the earnings report.
Earnings Estimates
Analysts expect Bank of America to report fourth-quarter revenue of $27.87 billion, up from $25.50 billion in last year's fourth quarter, according to data from Benzinga Pro.
The company has beaten analyst estimates for revenue in eight of the 10 six quarters, including the most recently reported third quarter.
Analysts expect the company to report earnings per share of 96 cents for the fourth quarter, up from 82 cents per share in last year's fourth quarter.
The company has beaten analyst estimates for earnings per share in more than 10 straight quarters.
What Analysts Are Saying
Most analysts have been positive on Bank of America heading into earnings.
Here are recent analyst ratings on Bank of America and their price targets:
- TD Cowen: Maintained Buy rating, raised price target from $64 to $66
- Wolfe Research: Downgraded from Outperform to Peer Perform, no price target
- Goldman Sachs: Maintained Buy rating, raised price target from $58 to $64
- Truist Securities: Maintained Buy rating, raised price target from $58 to $62
- Barclays: Maintained Overweight rating, raised price target from $59 to $71
Key Items to Watch
Bank of America is one of multiple financial stocks to report quarterly financial results this week, helping to kick off earnings season.
JPMorgan Chase & Co (NYSE:JPM) reported fourth-quarter financial results Tuesday morning, with revenue and earnings per share both beating analyst ratings.
The company reported strong growth for net interest income, noninterest revenue and Markets revenue.
"Each line of business performed well," JPMorgan CEO Jamie Dimon said Tuesday morning.
Bank of America will report after this report and likely be judged by investors for how the results compare to its peers. JPMorgan shares started Tuesday's session trading higher, but have since fallen and are down 3.5% at the time of writing. JPMorgan shares are up 28.2% over the last 52 weeks.
Bank of America saw net interest income up 9% year-over-year in the third quarter, along with noninterest income up 13% year-over-year. The company saw record net interest income in the quarter.
Analysts and investors are likely expecting another strong report and double beat from the financial company, especially after a double beat from JPMorgan.
Berkshire Hathaway Inc (NYSE:BRK)(NYSE:BRK) new CEO Greg Abel and Chairman Warren Buffett will likely be among those following the Bank of America report closely.
Bank of America is the third-largest holding in the Berkshire Hathaway portfolio at 9.9%, according to CNBC. Berkshire owns 568,070,012 BAC shares, representing approximately 7.8% of the company.
Buffett, who stepped down as a CEO, was a big backer of financial companies, but in recent years cut some of the long-owned companies from the portfolio. Investors will be closely watching to see if changes are made to the Bank of America stake in the coming quarters, a position that has been lowered in recent years.
Bank of America's report could make other bank stocks volatile and could also impact top financial sector ETFs like the State Street Financial Sel SPDR ETF (NYSE:XLF). Bank of America is the fifth-largest holding in the ETF at 4.7% of assets.
BAC Price Action: Bank of America stock is down 1.1% to $54.60 on Tuesday versus a 52-week trading range of $33.06 to $57.55. Bank of America shares are up 21.2% over the last 52 weeks.
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