Bank of America's Rock-Bottom P/E and 25% Upside Potential

Financial giant Bank of America Corp (NYSE: BAC) did almost everything right in 2025. The stock logged a powerful rally, hit a record high, and finished the year in strong form. It even pushed on to fresh all-time highs in the first few trading days of January, and the bulls looked set to remain in control in 2026. 

Then things cooled. A pullback set in, gathering pace after the bank’s earnings report two weeks ago, and knocking roughly 10% off the share price. On the surface, it has not been a great start to the year. But zoom out, and the picture isn’t actually that bad. The broader uptrend remains intact, selling pressure is already starting to look tired, and the stock’s valuation has reset to one of the lowest price-to-earnings (P/E) multiples among mega-cap stocks today.

With analysts falling over themselves to rate shares a Buy and many calling for an upside of at least 25%, Bank of America is quietly shaping up as one of the more interesting large-cap setups in the market heading into February. Let’s take a closer look.

An Attractive Valuation

With a current reading of sub-14, Bank of America’s P/E ratio is officially the lowest of all mega-stocks right now. For those of us on the sidelines who believe the recent selling is more of a pause than the start of a reversal, that makes for a solid buy-the-dip opportunity. 

When a stock dips like Bank of America did in the week before its quarterly earnings report, and then continues to fall following its release, you’d expect the report to have been bad.

However, Bank of America delivered yet another solid report, topping expectations on both revenue and earnings, impressing with its operating leverage and reporting provisions for credit losses that came in well below forecasts.

With that in mind, January’s pullback appears to have been driven more by broader market forces than any deterioration in Bank of America’s prospects.

Rising geopolitical tensions have been weighing on equities in recent weeks, and it looks like Bank of America’s shares were simply caught up in that shift to risk-off sentiment.

The lack of any major follow-through this week all but confirms the weakness was macro-driven. With the uptrend still intact and selling pressure starting to look tired, the stock’s resulting lower P/E ratio makes for a particularly interesting risk/reward profile. 

Analysts See Meaningful Upside From Here

Adding to the sense that the market has been too negative is the fact that many analysts are calling Bank of America a red-hot Buy right now. The team at Goldman Sachs just reiterated its Buy rating while boosting its price target on the stock to $67. 

Their call echoes similar moves from Morgan Stanley and TD Cowen, both of which reiterated Buy or equivalent ratings earlier this month with price targets of $64. Those targets imply an upside of more than 25% from current levels—not bad for a stock with a rock-bottom valuation. 

Risks Remain, But Are Largely Known

There are still some headwinds for the stock to contend with as we head into February. One of the more prominent is the proposed 10% cap on credit card interest rates announced earlier this month. If implemented, it could pressure profitability across parts of the consumer banking business.

That said, the market has had time to digest this, and the recent pullback likely has priced in that uncertainty. Plus, Bank of America’s diversified revenue base and scale provide a buffer from potential rate caps that smaller peers may lack.

Still, the bulls will need to stay strong in the coming sessions to prove that they’re back in control. Last week, the stock hit a deep low, and while it’s bounced since then, it remains to be seen if the $52 level is a hard floor. 

If that floor holds, don't be surprised to see the stock trade into the upper $50s or mid-$60s by the end of the quarter. 

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