On Wednesday, Baird maintained a Neutral rating on Bank of America (NYSE:BAC) but increased the price target to $40 from the previous $38. This adjustment follows the bank's reported second-quarter earnings per share (EPS) of $0.90, surpassing the consensus estimate of $0.80 and Baird's expectation of $0.79.
The financial institution's quarterly performance exceeded forecasts, with a core pre-provision net revenue (PPNR) of approximately $9.23 billion, which was above the anticipated $8.94 billion. This success was attributed to robust fee income.
Additionally, the quarter included roughly $25 million in reserve releases and negligible net derivative valuation adjustment (DVA) losses of about $1 million.
Bank of America's forward-looking statements suggest a potential modest increase in PPNR compared to consensus estimates, driven by improvements in net interest income (NII) and fees. The bank also indicated that further gains could be realized depending on the growth of loans and deposits.
The bank's recent financial results were considered solid, and an improvement in card delinquency trends was noted as a positive aspect. Despite the favorable results and outlook, Baird's stance remains neutral, with the bank's shares trading at approximately 1.75 times tangible book value (TBV).
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