Bank of America (BAC) Stock: Dip Buy or Warning Sign After Q3 Miss?

TLDR

• Bank of America (BAC) stock opened at $51.28 on Friday, down 0.8%, well below its 50-day average of $59.05.
• Q3 adjusted EPS was $1.08 against a $1.10 estimate, and a $1.2 billion anti-money laundering penalty cut reported EPS to $0.91.
• Net interest income rose 8% to $16.6 billion, and management projects at least 8% growth in 2027.
• Baird upgraded the stock to Outperform, while Citigroup, TD Cowen and Keefe, Bruyette & Woods cut price targets.
• The stock trades at 9.9 times expected 2027 earnings, compared with 13.32 times for JPMorgan Chase.

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Bank of America (BAC) stock opened at $51.28 on Friday and was down 0.8% on the day. That price sits well below the 50-day moving average of $59.05.

Bank of America Corporation, BAC

It also trades under the 200-day average of $56.69. The 12-month range runs from a low of $46.12 to a high of $65.22.

The pullback follows third-quarter results released October 14. Adjusted earnings came in at $1.08 per share, two cents short of the $1.10 consensus.

Revenue of $29.96 billion also missed the $30.58 billion estimate. It was still up 3.2% from a year ago.

A $1.2 billion penalty tied to anti-money laundering and sanctions lapses hit the bottom line. Reported earnings per share fell to $0.91, down 14% from last year. Not the quarter the bank had in mind.

What Drove the Quarter

Bank of America said earnings would have been slightly higher than last year without the charge. Expenses grew faster than revenue, and weaker fixed-income trading added pressure.

The efficiency ratio came in at 66%. Excluding the settlement, it was 62%, still 2 points above a year earlier.

Net interest income rose 8% to $16.6 billion. Higher loan balances and a 0.15% gain in net interest yield helped.

Non-interest income fell 2% on lower investment banking fees. Management has projected at least 8% net interest income growth in 2027.

The bank holds about $861 billion in debt securities yielding 2.75%. Reinvesting at higher rates is expected to lift earnings.

Analysts and Investors Weigh In

Baird upgraded the stock to Outperform with a $62 price target. HSBC rates it a buy with a $65 target.

Citigroup cut its target from $66 to $60 and kept a buy rating. TD Cowen lowered its target from $60 to $56 with a hold rating.

Keefe, Bruyette & Woods trimmed its target from $70 to $65 and stayed at outperform. MarketBeat lists a Moderate Buy consensus with a $62.52 average target.

TipRanks shows a Strong Buy rating, with 14 Buys and two Holds. Its average target of $62.87 implies about 23% upside.

The stock trades at 9.9 times expected 2027 earnings, versus 13.32 times for JPMorgan Chase. Analysts expect 2027 EPS of about $5.21, up 17%.

Senator Elizabeth Warren called the penalty too light. Several law firms have announced investigations into possible securities claims.

Robertson Stephens Wealth Management raised its stake by 26.5% in the third quarter. It bought 59,853 more of the stock for a total of 285,650, worth about $15.5 million.

The quarterly dividend is now $0.32 per share, up from $0.28, for a yield of about 2.5%. Bank of America also said it has completed much of the work required under its consent order.