Bank of America (BAC) stock downgraded to Neutral at Citi
By Senad Karaahmetovic
Citi analysts downgraded Bank of America (NYSE:) stock to Neutral from Buy with an unchanged price target of $40 per share.
The analysts see downside risk to net interest income (NII) estimates for the next year due to “a catch up on deposit repricing and noninterest bearing deposit outflows outweighing the benefits of fixed rate assets repricing.” Citi is below the consensus on NII estimates for 2023.
Moreover, they believe the bank sector has almost fully priced in 2023 NII tailwinds. While the credit risk is still “a wildcard,” they see the potential for a better-than-feared scenario. However, investors should be cautious while trying to play the credit trade.
“We have yet to see meaningful deterioration; plus, we believe the regionals will be a better place to play,” the analysts added in a client note.
Finally, the analysts also weighed in cautiously on capital return as the bank may be forced to set aside increased capital requirements.
As of 09:25 EST (14:25 GMT), Bank of America stock price trades 1.2% lower. Shares are down over 13% YTD, outperforming the .
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