To The Moon

$Bank of America(BAC)$ is due to release their Q2 earnings before the market opens on Tuesday (16 July), $Morgan Stanley(MS)$ would be reporting the result as well.

Last week, we have seen $JPMorgan Chase(JPM)$ $Citigroup(C)$ and $Wells Fargo(WFC)$ releasing their results, and it was a mixed results, with the financial sector performing only with a 0.22% gain on last Friday (12 July).

Revenue Earnings EPS Expected To Exceed Consensus

Market consensus for BAC revenue estimates is at $25.20B, and the consensus EPS estimates is $0.80, though there is a decline of around 10% from last year same period.

BAC is anticipated to beat the estimates on the gaining of more market share in investment banking and capital markets, their dealmaking activities is also expected to improve.

Rebound In Dealmaking Expected. More Than 25% Gain Year-To-Date

Market is expecting BAC to see a rebound in dealmaking activities as interest rates decrease. So far, BAC stock price have outperformed the market with a more than 25% gain YTD, this reflect the bank strong operational performance and strategic market positioning.

BAC is also gaining market share in investment banking and capital markets. So what I would like to see if their NII (Net Interest Income). It should be showing some improvement as interest rates is decreasing.

Analyst Price Target Forecast For Bank Of America (BAC)

Based on 18 Wall Street analysts offering 12 month price targets for Bank of America in the last 3 months. The average price target is $41.70 with a high forecast of $48.00 and a low forecast of $35.20. The average price target represents a 0.26% change from the last price of $41.59.

If we were to take a leaf from the major banks earnings release last week, we could see that outlook guidance and NII is common things that have been mentioned.

Dow Jones giant JPMorgan Chase (JPM) topped earnings and revenue views early Friday as big banks kicked off the Q2 earnings season. Wells Fargo (WFC) fell after net interest income outlook missed views.  Citigroup (C) rose on its quarterly beat.  JPM stock and Citi both fell out of buy zones after results.

So I would think that BAC could suffer an adjustment from its earnings if it beat the market expectation, and what would be interesting is net interest income outlook, if BAC maintain or better its market shares in investment banking and capital markets, we could be seeing an increased forecast of its net interest income, which I will share in the next section.

Bank Of America (BAC) Net Interest Income Stable But Have Room For Increase

If we looked at the net interest margin according the annual, BAC show significant improvement after the pandemic recovery, with a nice increase from 2.24 to 2.44 from 2022 to 2023.

As for the quarterly side, there have been some weakness in March 2024, but I would expect BAC to go back to around $2.45 to $2.50 in this upcoming earnings.

If we compare the net interest margin among the other banks, BAC has the lowest, so there are rooms to catch up as BAC is expecting a rebound in dealmaking activities when interest rates start to go down.

Summary

With BAC gaining market share in investment banking and capital markets, these two areas should help to contribute to BAC interest earnings, on top of that, BAC could benefit from lower interest rates.

As we get closer to the rate cut where interest rates decrease, BAC has the advantage of a rebound in their deal making activities. So what I would look out is the bank outlook forecast in these areas.

Appreciate if you could share your thoughts in the comment section whether you think BAC would provide a positive and forward looking outlook for its net interest income?

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.