Trading Bank of America Post Q3 Earnings

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Bank of America is the second-largest US bank when calculated by total deposits. The stock accounts for about 10% of Warren Buffett’s Berkshire Hathaway portfolio although the investor has soured on banking stocks recently.  

The most recent third-quarter earnings report came in better than analysts were expecting. However, with a potential slowdown in Federal Reserve interest rate hikes, there are some headwinds to take into consideration.  

Learn more about Bank of America’s latest earnings report, what the analysts are forecasting and what the latest hedge fund activity for the stock has been.











Stock: Bank of America
Symbol for Invest.MT5 Account: BAC
Date of Idea: 6 Dec 2022
Time Line: 1 – 6 months
Entry Level: $39.00
Target Level: $52.00
Position Size for Invest.MT5 Account: Max 5%
Risk: High

  • The Invest.MT5 account allows you to buy real stocks and shares from 15 of the largest stock exchanges in the world.

All trading is high risk and you can lose more than you risk on a trade. Never invest more than you can afford to lose as some trades will lose and some trades will win. Start small to understand your own risk tolerance levels or practice on a demo account first to build your knowledge before investing. 

Trading Bank of America Stock Pros and Cons

Bank of America’s latest third-quarter earnings report showed: 

  • Revenue: $25.61 billion vs an expected $23.57 billion 
  • Earnings per share: $0.81 cents vs an expected $0.77 cents per share 
  • Loan growth of 12% over the last year 
  • Net interest income up 24% in the quarter 
  • Fixed-income trading revenue up 27% from last year 
  • Equity trading revenue down 4% 
  • Investment banking revenue down 46% 

Many banks have received a boost from the Federal Reserve’s aggressive interest rate hikes this year. Banks are able to generate more profit from taking in deposits and then lending out in form of loans. Bank of America has, so far, benefitted from this situation with net income rising over the quarter.  

However, as merger and acquisition (M&A) activity has declined due to higher borrowing costs, the investment banking division revenue dropped by 46%. Bank of America is considered to be a well-diversified bank with revenue from commercial and consumer activities.  

In fact, the bank has invested heavily in improving its consumer banking division. The investment in new digital services and technology helped the bank to add more than 400,000 new customers to their checking account service and more than 1.3 million new credit cards.  

As the banking sector will be affected by the Federal Reserve slowing the pace of interest rate hikes, as highlighted in Fed Chairman Jerome Powell’s most recent speech, analysts are now turning their attention to banks that have a diversified revenue stream.

Bank of America Hedge Fund Holdings

In the latest 13F filing report submitted to the Securities and Exchange Commission of 462 hedge funds, it shows that hedge funds increased their holdings in Bank of America shares by 14.6 million shares in the last quarter.  

The overall trend quarter by quarter has been lower since 2020. However, hedge funds increased their positions in the last two quarters. 

Source: TipRanks, 6 Dec 2022

 

Bank of America Stock Forecast – What do the Analysts Say?

According to analysts polled by TipRanks for a Bank of America stock forecast in the past 3 months, there are currently 9 buy, 4 hold and 0 sell ratings on the stock. The highest price level for a Bank of America stock forecast is $52.00 with the lowest price target at $28.00. 

The average price target for a Bank of America stock forecast is $40.42.

Source: TipRanks, 6 Dec 2022

 

An Example Trading Idea for the Bank of America Stock Price

An example trading idea for the Bank of America share price could be as follows:  

  • Buy the stock on a break above $39.00 to allow for current market volatility. 
  • Target the highest analyst price target at $52.00. 
  • Keep your risk small at a maximum of 5% of your total account.   
  • Time Line = 1 – 6 months  
  • If you buy 10 Bank of America shares:  

    • If target is reached = $130.00 potential profit ($52.00 – $39.00 * 10 shares).

Remember that markets go up and down and it is unlikely the share price will move up in a straight line. In fact, it may even go much further down before it rises, especially considering that Bank of America was down 41% on the year in October.

Be sure to exercise good risk management and always know how much you could potentially lose on a trade and the risks involved, as well as the costs.

With the Admirals Invest.MT5 account you can buy and sell US stocks with a commission from $0.02 per share. This means buying 10 shares in Bank of America stock would result in a commission of $0.20 ($0.02 * 10 shares) for executing a per-side transaction.

There is a low minimum transaction fee of $1. So, the example trading idea above would result in a commission of just $1 overall! 

How to Buy Bank of America Stock in 4 Steps  

With Admirals, you can buy shares in companies like Bank of America with a low commission of just $0.02 per share and a low minimum commission of just $1 on US stocks. 

  1. Open an account with Admirals to access the Trader’s Room.   
  2. Click on Trade on one of your live or demo accounts to open the web platform.   
  3. Search for your stock at the bottom of the Market Watch window and drag the symbol onto the chart.   
  4. Use the one-click trading feature, or right-click and open a trading ticket to input your trade size, stop loss and take profit level. 
Source: Admirals MetaTrader 5 Web. Past performance is not a reliable indicator of future results, or future performance.

 

Click on the banner below to trade Bank of America stock today. ▼▼▼ 

Do You See the Bank of America Stock Price Moving Differently?   

Remember that all analytics and trading ideas are based on the personal view and experience of the author.  

If you believe there is a higher chance Bank of America’s share price will move lower, then you can also trade short from a CFD (Contracts for Difference) trading account which Admirals also provide.  

The Trade.MT5 and Trade.MT4 account allows you to speculate on the price direction of stocks and shares using CFDs.  

This means you can trade long and short to potentially profit from rising and falling stock prices. Learn more about CFDs in this How to Trade CFDs article. 

INFORMATION ABOUT ANALYTICAL MATERIALS:   

The given data provides additional information regarding all analysis, estimates, prognosis, forecasts, market reviews, weekly outlooks or other similar assessments or information (hereinafter “Analysis”) published on the websites of Admirals’ investment firms operating under the Admirals trademark (hereinafter “Admirals”) Before making any investment decisions please pay close attention to the following:   

  • This is a marketing communication. The content is published for informative purposes only and is in no way to be construed as investment advice or recommendation. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.    
  • Any investment decision is made by each client alone whereas Admirals shall not be responsible for any loss or damage arising from any such decision, whether or not based on the content. 
  • With a view to protecting the interests of our clients and the objectivity of the Analysis, Admirals has established relevant internal procedures for the prevention and management of conflicts of interest. 
  • The Analysis is prepared by an independent analyst, Jitanchandra Solanki (analyst), (hereinafter “Author”) based on their personal estimations.    

  • Whilst every reasonable effort is taken to ensure that all sources of the content are reliable and that all information is presented, as much as possible, in an understandable, timely, precise and complete manner, Admirals does not guarantee the accuracy or completeness of any information contained within the Analysis.    
  • Any kind of past or modelled performance of financial instruments indicated within the content should not be construed as an express or implied promise, guarantee or implication by Admirals for any future performance. The value of the financial instrument may both increase and decrease and the preservation of the asset value is not guaranteed. 
  • Leveraged products (including contracts for difference) are speculative in nature and may result in losses or profit. Before you start trading, please ensure that you fully understand the risks involved. 

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