BANK OF AMERICA : Strong buy (Barron's)

mucius

25 août 2011 •14:54

Analysts came out on Wednesday to push back against the recent selloff and rumor-mongering about Bank of America (BAC) and Citigroup (C), which may have helped fuel a rally in the sector.

With some observers claiming Bank of America is in need of a capital infusion, the bank itself has released rebuttals. But on Wednesday, analysts started to join in. They are not exactly beating the drum to encourage shareholders to buy stock, but some have supported the bank’s claim that it is sufficiently capitalized.

Rochdale Securities analyst Richard Bove, who had already spoken out Tuesday in support of Bank of America, released a report that noted Bank of America, Citigroup and several other banks are trading well below their tangible common equity value and have cash and security positions that exceed their market value by more than 6 to 1.

Raymond James analyst Anth0ny Polini wrote a note to clients today reiterating his Strong Buy rating on the stock. “Recent news items have been as absurd as any we’ve seen in many years of following the company,” Polini wrote.

Others have been more critical of Bank of America, but argued that Citigroup should not be trading in tandem with its rival given the differences in their business models.

“[R]elative to BAC, the firm’s risk profile is materially different (less mortgage-related tail risk, higher capital/reserves, less legal/regulatory pressures), and Citi has greater exposure to the higher-growth markets in Asia and Latin America,” wrote Nomura Securities analyst Glenn Schorr.