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Banking, finance, and taxes

Bove’s Bank of America Call Confusing To Bulls & Bears (BAC)

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By Douglas A. McIntyre Updated Published
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Bank of America Corporation (NYSE: BAC) is having a hard time finding its footing this morning.  Rochdale Securities’ Dick Bove has a research note that is leaving investors and traders scratching their heads.  Bove, one of the top banking analysts, argued that the banking giant may set aside as much as $46 billion for loan loss provision in 2009.  He called the losses “horrific.”  But the research call was almost as equally confusing to the bulls and the bears since Bove lifted his price target and maintained a “Buy” rating on the stock.

When you see words like “horrific” and increasing loan loss reserves, it seems odd when you also see a price target raised.  But Bove simultaneously raised his price target by $5.00 to $19.00 as his confidence in management and the company is improving.

Bove even went as far as calling the Merrill Lynch and Countrywide acquisitions as “positive” for the bank’s future position.  Bove now also believes that the calls to ouster Ken Lewis as CEO will begin to quite down.  A rise of 400% from the bottom sure seems to change the mood.  Lastly, Bove believes that the insolvency calls were never accurate and that is part of his thesis for raising his target so much.

Despite the negative points in the call, this $19.00 price target leaves an implied upside of about 40% from the 3% drop to $13.30 this morning.  This follows two days of gains as shares closed up $0.99 at $12.97 on Thursday and closed up $0.75 at $13.72 on Friday.

Jon C. Ogg
June 15, 2009

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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