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Bank of America: Undervalued Stock Indicates Potential Upside

StockInvest.us, 1 month ago

StockInvest.us Fundamental Analysis

Bank of America Corporation (Ticker: BAC) currently trades at $27.62 as of the close of trading on October 17, 2023. The recent market capitalization of BAC is $219.48 billion with an Average The number of shares outstanding is 7.95 billion.

The company's earnings per share (EPS) is reported at $3.48, and Price to Earnings ratio (PE) stands at 7.94, which is relatively low indicates that the stock could be undervalued.

Concerning the recent earnings announcement on October 17, 2023, the CEO Brian Moynihan communicated an optimistic view of the economy, described a trend of consumers moving from cash into the market and spending less on credit and debit cards. The company’s earnings have reportedly exceeded expectations. These factors suggests increased business activity and could spur further growth for BAC.

Technical Analysis

The last trading day saw a price change of $0.63 (2.33%) from the day's low of $26.72 and high of $27.87. The 50-day moving average stands at $28.41 while the 200-day moving average is $30.19, indicating a bearish trend. The MACD over the past three months stands at -0.91, further emphasizing this bearish sentiment.

The RSI14, otherwise known as the Relative Strength Index, stands at 54. This suggests that the stock is neither overbought nor oversold. The average trading volume is reported to be around 42.12 million, but the volume on the recent trading day surged to 88.51 million indicating a strong investor interest.

Bank of America BAC has a solid support level at $26.99 and resistance at $28.65. The stop-loss has been determined at $26.35, which investors can consider to limit potential losses.

Analyst Recommendations and Targets

The consensus among analysts is a "Buy" rating for BAC, with 10 analysts recommending "Buy", 4 recommending "Hold", and only 1 suggesting "Sell". The target high is set at $64, target low at $35, with a median target of $44.5. These suggest a significant upside from the current trading price.

The discounted cash flow (DCF) analysis returns a value of $55.37, indicating the stock is potentially undervalued to a large extent given the current market price.

Future Expectations and Recommendation

The future expectation for BAC’s stock price on October 18, 2023, would be determined by the company's fundamental growth and diverse market factors. Given the company's strong earnings, optimistic CEO viewpoint, and the market's overall positive response, the stock could experience a rise.

For the upcoming week, the trend could be upwards, considering the technical analysis parameters, the undervalued DCF, and considering the bank's solid performance disclosure, unless some unexpected market events occur.

Finally, in review of the above analysis, the final evaluation for Bank of America Corporation (BAC) would be considered a "Buy". The recommendation is based on the recent optimistic earnings report, the undervalued DCF, and a strong consensus among analysts indicating an upside potential from the current price level.

Check full Bank of America forecast and analysis here.