Shares of Bank of America Corporation (NYSE:BAC) continued to slide in early trading on Thursday after tanking Wednesday on downbeat third-quarter results. Although the company missed earnings estimates, the outlook "comes across as constructive," according to Piper Sandler analyst Scott Siefers.
The Bank of America Rating: Siefers reiterated a Hold rating and cut the price target from $60 to $56.
The Bank of America Thesis: The company reported third-quarter earnings of 91 cents per share, missing consensus of $1.10 per share, Siefers said in the note.
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He estimated core earnings at $1.08 per share, excluding one-time items.
Bank of America missed earnings expectations as "better-than-expected expenses and credit costs were not enough to overwhelm lighter fees (particularly market making) than we had modeled," the analyst wrote.
While there seem to be several "cross-currents in the story," much of the outlook appears to be constructive, Siefers said. Bank of America’s net interest margin (NIM) continues to improve, coming closer to management’s 2.30% medium-term target, the analyst noted.
Moreover, management’s net interest income (NII) guidance for 2026 and growth "should sustain 8%+ into 2027E," translating to "solid rate-based NII progression," he further wrote.
"While the NII outlook seems both good and sturdy, the fee outlook requires a bit more faith," Siefers stated.
Bank of America expects to return to positive operating leverage in the fourth quarter and to generate 200-300 basis points or more in 2027, he added.
The analyst lowered the earnings estimates for 2026 and 2027 from $4.52 per share to $4.49 per share and from $5.10 per share to $5.05 per share, respectively.
BAC Price Action: Bank of America shares declined 0.29% to $51.26 at the time of publication on Thursday.
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