Bank of America (BAC) Stock Is Down 1%: Is the Earnings Dip Worth Buying?

TLDR

Table of Contents

Bank of America (BAC) stock opened at $51.28 on Friday, down 1%, far below its 50-day average of $59.05.
Adjusted Q3 EPS of $1.08 missed the $1.10 estimate, and a $1.2 billion penalty cut reported EPS to $0.91.
Net interest income rose 8% to $16.6 billion, with at least 8% growth expected in 2027.
Baird upgraded the stock to Outperform, while Citigroup, TD Cowen and KBW lowered targets.
BAC trades at 9.9 times 2027 earnings, compared with 13.32 times for JPMorgan Chase.

Bank of America (BAC) stock opened at $51.28 on Friday, down 0.8%. The price sits well under its 50-day average of $59.05, so the pullback is hard to miss.

Bank of America Corporation, BAC

The 200-day average is $56.69, and the 12-month range runs from $46.12 to $65.22. The company’s market value stands at $358.59 billion.

Third-quarter results on October 14 set the tone. Adjusted earnings were $1.08 a share, two cents under the $1.10 estimate.

Revenue came in at $29.96 billion against a $30.58 billion forecast. That was still up 3.2% from a year ago.

A $1.2 billion penalty over anti-money laundering and sanctions lapses weighed on results. Reported earnings fell 14% to $0.91 per share.

Inside the Numbers

The bank said earnings would have edged above last year without the charge. Expenses grew faster than revenue, and fixed-income trading was weaker.

The efficiency ratio was 66%, or 62% excluding the penalty. That is still 2 points worse than a year earlier.

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

Non-interest income slipped 2% on lower investment banking fees. Management expects net interest income to grow at least 8% in 2027.

The bank holds about $861 billion in debt securities yielding 2.75%. Rolling those into higher rates could lift earnings.

What Analysts and Investors Are Doing

Baird upgraded the stock to Outperform with a $62 target. Citigroup cut its target to $60 from $66 but kept a buy rating.

TD Cowen lowered its target to $56 from $60 with a hold rating. Keefe, Bruyette & Woods trimmed its target to $65 from $70.

TipRanks shows a Strong Buy view, with 14 Buys, two Holds and a $62.87 average target. MarketBeat lists a Moderate Buy with a $62.52 target.

The stock trades at 9.9 times expected 2027 earnings, against 13.32 times for JPMorgan Chase. Analysts see 2027 EPS near $5.21, up about 17%.

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

Robertson Stephens Wealth Management raised its position by 26.5% last quarter, adding 59,853 for a total of 285,650. That stake is worth about $15.5 million.

The bank now pays a $0.32 quarterly dividend, up from $0.28, for a yield near 2.5%. It also says it has finished much of the work required under its consent order.

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