Bank of America Just Had a Monster Quarter and Wall Street Is Falling Over Itself to Raise Targets
Bank of America is sitting near a 52-week high at $61.59 and the reason is pretty simple, it just posted one of the best quarters in its recent history and Wall Street is scrambling to catch up.
Q2 earnings came in at $1.21 per share on $31.6 billion in revenue. Analysts were expecting $1.12 and $30.67 billion. Beat on both lines.
Revenue was up 15% year over year. Net income jumped 27% to $9.1 billion. Earnings per share grew 34%. Every single business segment posted double-digit net income growth, not one division carrying the others, everyone showing up.
The trading desk had a particularly wild quarter. Sales and trading revenue hit $7.1 billion, up 33% and the 17th straight year of annual growth. Equities trading alone surged 70% to $3.6 billion. Investment banking fees rose 50% to over $2.1 billion.
The Analyst Everyone Is Watching
Gerard Cassidy of RBC Capital raised his price target from $59 to $65 and kept his Outperform rating. This matters because Cassidy has covered US banks for over three decades and literally invented the Texas Ratio: a tool regulators and investors still use today to measure bank failure risk. When he moves, people notice.
His core argument is about deposits. Bank of America holds $2 trillion in customer deposits and pays very little for them. It then lends that money out at much higher rates. As long-term loan rates rise faster than short-term deposit rates, that gap, called net interest income, gets wider and the bank makes more money. Cassidy thinks that's exactly what's coming.
He's also not worried about credit quality, pointing to 15 years of building up capital reserves since the financial crisis.
Cassidy's $65 target is actually below the Wall Street consensus of $67.39. Jefferies is at $75. Goldman rose to $71. Barclays went to $72. So Cassidy is the most conservative of the bunch but for a guy with his track record, $65 is still a meaningful vote of confidence.
Do you think the big US banks are one of the better places to be in this market right now?
