Bank of America stock forecast: an optimistic scenario is 65 USD per share

Bank of America’s Q4 2024 report pleasantly surprised investors, with revenue increasing by 15% and net income skyrocketing by 112% compared to Q4 2023. These impressive results drove the bank’s stock to an all-time high.

This article will thoroughly examine Bank of America with a fundamental analysis of Bank of America’s Q3 and Q4 2024 report, as well as a description of a challenge stemming from its bond purchases in 2020-2021. It also includes a BAC technical analysis based on the current Bank of America stock performance and the BAC share forecast for 2025.

About Bank of America Corp

Bank of America Corp is one of the world’s largest financial institutions, offering a broad range of banking and related services. Amadeo Giannini founded the bank in 1904 in San Francisco, US, under the name Bank of Italy, which was rebranded as Bank of America in 1930. The modern corporation emerged in 1998 following a merger with NationsBank.

Bank of America provides retail and corporate banking services, investment and insurance products, asset management, and mortgage and lending services. Its headquarters are in Charlotte, North Carolina, US.

The bank’s IPO occurred in 1957 when its shares began trading on the New York Stock Exchange under the ticker BAC. Bank of America is among the largest banks in the US and worldwide, serving clients in more than 35 countries and managing assets exceeding 2.4 trillion USD.

Bank of America Corp’s main financial flows

Bank of America’s key areas of financial interest, which generate revenue, span various business lines, including retail, corporate, and investment services. These are divided into the following categories:

• Net interest income: this is generated from the difference between the interest received on loans issued and the interest paid to clients on deposits and other borrowed funds. Bank of America offers a broad range of financial products, including mortgages, commercial and auto loans, and credit cards
• Commissions: income from client transaction fees, including charges for maintaining bank accounts, processing payments and transfers, and managing assets
• Investment banking income: fees for advising on mergers and acquisitions, revenue from the issuance of shares and bonds, and earnings from trading financial instruments, including securities, currencies, and derivatives
• Asset management and insurance: asset management fees, insurance premiums, and returns on investments in insurance products
• Trading and market operations: financial gains from transactions involving securities, currencies, and derivatives
• Other sources of income: fees for safe deposit box rentals, returns from investments in sustainable development and infrastructure projects, and profits from government and corporate bonds

These areas diversify the bank’s revenue streams and make them resilient to economic crises, enabling Bank of America to compete effectively in the global market.

Bank of America Corp’s strengths and weaknesses

Bank of America’s strengths include:

• Revenue diversification: clients are offered a broad range of financial services, including retail banking, investment services, asset management, corporate banking, and insurance. This diversity strengthens the bank’s resilience to market fluctuations across multiple segments and allows it to generate revenue from various sources
• Digital innovations: the bank is actively introducing digital technologies, including mobile apps and the virtual assistant Erica. These innovations enhance service quality, improve operational efficiency, and help attract new clients
• Strong position in investment banking and asset management: the bank’s competitive advantages in investment and private banking, alongside effective asset management, ensure its leadership both in the US and internationally. As a result, it can offer high-quality services to high-net-worth clients and large international corporations worldwide
• Wide network and global presence: the bank has representative offices in more than 35 countries, enabling it to serve clients regardless of location. The bank holds a leading position both in domestic and international markets
• Substantial capital and liquidity guarantees: with extensive financial resources and highly liquid assets, the bank is well-positioned to manage risks effectively and maintain stability during economic downturns

Bank of America’s weaknesses include:

• Dependence on interest rates: the bank’s primary revenue stream is derived from the difference between loan and deposit interest rates. This makes it sensitive to changes in the economic policies of financial regulators and fluctuations in interest rates. During periods of low rates, bank profitability typically declines
• High operating costs: despite the scale of the corporation and its elevated level of digitalisation, the bank incurs more substantial costs compared to its competitors, including JPMorgan Chase (NYSE: JPM) and Wells Fargo (NYSE: WFC), which negatively affects the overall profitability of the transactions performed
• Weak positions in certain retail banking segments: although the bank holds a significant market share in the US, it lags behind competitors such as JPMorgan Chase and Wells Fargo in retail banking and credit cards. These banks have a larger client base and more developed service networks

Overall, Bank of America is a strong player in the financial market due to its diversification and innovations. However, it faces challenges, including dependence on macroeconomic factors and high operating costs.

Bank of America Corp’s Q3 2024 report

In October, Bank of America published its report for Q3 2024, which ended on 30 September. The key data from the report is outlined below:

• Revenue: 25.30 billion USD (+1%)
• Net income: 6.90 billion USD (-12%)
• Earnings per share: 0.81 USD (-10%)
• Net Interest income: 14.0 billion USD (-3%)

Revenue by segment:

• Consumer Banking: 10.40 billion USD (-1%)
• Global Wealth and Investment Management: 5.80 billion USD (+8%)
• Global Banking: 5.83 billion USD (-6%)
• Global Markets: 5.60 billion USD (+14%)

Net income by segment:

• Consumer Banking: 2.70 billion USD (-6%)
• Global Wealth and Investment Management: 1.10 billion USD (+1%)
• Global Banking: 1.90 billion USD (-27%)
• Global Markets: 1.50 billion USD (+25%)

Shareholders received nearly 5.60 billion USD, including 2.00 billion in share dividends and 3.50 billion through stock buybacks.

Despite a 1% increase in total revenue, the bank’s net income declined by 12%. Net income from banking services in the global and US consumer markets decreased. However, the investment segment demonstrated positive trends, helping offset the banking sector’s negative impact.

Bank of America Corp’s Q4 2024 report

• Revenue: 25.3 billion USD (+15%)
• Net income: 6.7 billion USD (+112%)
• Earnings per share: 0.82 USD (+134%)
• Net interest income: 14.4 billion USD (+3%)

Revenue by segment:

• Consumer Banking: 10.6 billion USD (+3%)
• Global Wealth and Investment Management: 6.0 billion USD (+15%)
• Global Banking: 6.1 billion USD (+3%)
• Global Markets: 4.8 billion USD (+20%)

Net income by segment:

• Consumer Banking: 2.8 billion USD (+2%)
• Global Wealth and Investment Management: 1.2 billion USD (+14%)
• Global Banking: 2.1 billion USD (-13%)
• Global Markets: 941 million USD (+27%)

In the Q4 2025 earnings report, Bank of America’s management expressed optimism about its performance and outlook. It was noted that each business line contributed more to revenue, and there was a noticeable increase in deposits and granted loans, surpassing the industry average. Net interest income is projected to range between 14.5 and 14.6 billion USD in Q1 2025, with steady growth expected to reach approximately 15.5-15.7 billion USD by Q4 2025. The second half of 2025 is anticipated to see more substantial growth than the first, ensuring an operational advantage throughout 2025.

Expert forecasts for Bank of America Corp’s stock for 2025

• Barchart: 15 out of 23 analysts have rated Bank of America’s stock as a Strong Buy, three as a Moderate Buy, and five as a Hold, with an average price target of 50.29 USD
• MarketBeat: 17 out of 24 specialists have assigned a Buy rating to the shares, six gave a Hold recommendation, and one rated them as a Sell. The price growth target is 57.00 USD, while the price target for selling is 47.50 USD
• TipRanks: 18 out of 20 professionals recommended the stock as a Buy and two as a Hold. The average price target is 52.26 USD
• Stock Analysis: out of 22 experts, six rated the shares as a Strong Buy, nine as a Buy, six as a Hold, and one analyst designated a Strong Sell rating to the stock, with a price target of 33.90 USD. The price growth target is 58.00 USD

Bank of America Corp’s stock price forecast for 2025

On the monthly timeframe, Bank of America’s stock has been trading within an ascending channel since 2015, when the Federal Reserve raised the interest rate for the first time since 2007. The bank has delivered better-than-expected results for the last three quarters, positively impacting its quotes. Bank of America has also been conducting share buybacks, with the stock price reaching an all-time high of 46.30 USD, but there is still potential for further growth towards the channel’s upper boundary. Based on the current performance of Bank of America Corp’s stock, various price movement scenarios are considered for 2025.

The baseline forecast for Bank of America Corp’s stock suggests further growth to the channel’s upper line at 54 USD. Subsequently, a correction on the stock chart could lead to a potential price drop to 30 USD. The price reaching the channel’s upper boundary and divergence on the MACD indicator support this potential correction.

If the price surpasses the 54 USD resistance level, the next growth target will be 65 USD, as indicated by Fibonacci levels.

Risks of investing in Bank of America Corp’s stock

Like many other major financial institutions in the US, Bank of America faces unrealised losses on bond portfolios purchased in 2020 and 2021. At the time, these were considered relatively ‘safe’ assets with predictable returns. However, starting in 2022, the Federal Reserve began ‘aggressively’ raising the key interest rate to curb inflation, which led to a decline in the market value of previously issued securities.

A similar situation occurred with Silicon Valley Bank (SVB), which faced a liquidity crisis in 2023 and was later acquired by Bank of America. This merger allowed Bank of America to strengthen its position in the technology sector but also exacerbated the issue of unrealised losses, as SVB’s bonds were transferred to Bank of America’s balance sheet.

According to accounting standards, bonds a bank intends to hold until maturity are recorded at their nominal value rather than market value. This helps the bank avoid recognising losses in its financial statements but exposes it to liquidity risks. If Bank of America is forced to sell bonds to meet its financial obligations, unrealised losses will become realised. This could also affect its capital adequacy ratio, which is crucial for meeting regulatory requirements.

As of the end of Q4 2024, Bank of America’s bond portfolio, classified as ‘held to maturity’, stood at 567 billion USD. To highlight the scale of the problem, the value of 20-year Treasury bonds has fallen by 37% since 2021, suggesting that the bank’s potential losses could exceed 150 billion USD. However, these estimates remain speculative, as Bank of America does not disclose the unrealised losses, citing such information as confidential.

If interest rates remain elevated for an extended period, Bank of America may struggle to offset these losses. This could limit the bank’s ability to increase profitability and reduce its debt burden.

A more severe challenge would arise if there were a mass withdrawal of deposits by customers, similar to the events that led to the collapse of Silicon Valley Bank. In such a scenario, the bank would need to sell bonds at a loss to meet client demands. Since Bank of America is a systemically important financial institution in the US, the authorities might resort to unpopular measures to stabilise the situation, such as imposing a temporary ban on withdrawals. However, the likelihood of this scenario is low, as it could trigger widespread panic and potentially collapse the US financial system.

This could be one reason Warren Buffett’s Berkshire Hathaway fund has been reducing its holdings of Bank of America shares monthly since July 2024. The fund has steadily decreased the number of these shares in its investment portfolio.

Summary

Bank of America’s optimistic outlook for 2025 and a stock buyback program increase the likelihood of further growth in the bank’s share value. However, the Federal Reserve’s policy continues to pose a risk in this situation. On the one hand, a return to monetary policy tightening could positively impact the bank’s interest income. On the other hand, it would reduce the value of bonds, leading to uncovered losses. This compels the bank to increase provisions, thereby freezing funds. For this reason, Bank of America’s stock appears to have limited growth potential, unlike JPMorgan Chase & Co. (NYSE: JPM) shares.

If the new administration under Donald Trump implements more favourable conditions for US financial institutions, Bank of America’s stock could reach 65 USD in 2025.