Bank Of America Stock Is Up Over 21% For The Year: High Interest Rates Fuel Bullish Outlook

Author: Surbhi Jain | July 03, 2024 08:33am

Bank of America Corp (NYSE:BAC) stock hit a new 52-week high of $40.96 on Tuesday, continuing its impressive run.

The firm’s stock is up 40.17% over the past year and 21.56% year-to-date. It has outpaced both the S&P 500 and the S&P Banks Index.

Bank of America Stock: Bullish Signals Abound

Bank of America's technical indicators are flashing bullish signals across the board. Here's why:

Chart created using Benzinga Pro

• Moving Averages: Bank of America’s share price of $40.93 is above its 5-day, 20-day and 50-day exponential moving averages, indicating strong buying pressure. Specifically, the 8-day SMA is $39.73, the 20-day SMA is $39.63 and the 50-day SMA is $38.92—all pointing to a bullish trend.
• Long-Term Indicators: With the stock trading at $40.93, it's comfortably above its 200-day SMA of $33.65, reinforcing the bullish outlook.

Chart created using Benzinga Pro

• MACD: The Moving Average Convergence Divergence (MACD) indicator stands at 0.31, suggesting continued upward momentum.
• RSI: The Relative Strength Index (RSI) is at 63.64, indicating the stock is approaching overbought territory but still signaling strength.
• Bollinger Bands: The Bollinger Bands (25) range from $38.59 to $40.55, is suggesting a bullish outlook as the stock price remains above these bands.

Read Also: US Banks Bump Up Dividends Following Fed’s Successful Stress Test

Goldman Sachs’ Analyst Sees Valuation Discount

Goldman Sachs analyst Richard Ramsden is cautiously optimistic for the second-quarter earnings season, citing a favorable environment of sustained high interest rates that could boost U.S. banks’ profitability.

Ramsden noted that large banks are trading at about 55% of the S&P 500 P/E ratio, compared to a historical average discount of 61%. This discount, coupled with diminishing headwinds and potential upside post-U.S. election, presents an attractive entry point for BAC.

Goldman Sachs remains positive on Bank of America, highlighting its Net Interest Income (NII) trajectory, expected to reaccelerate later in the year.

With Bank of America's technical indicators and analyst outlook aligning on a bullish trajectory, the stock appears poised for continued growth. For investors seeking a strong play in the banking sector, BAC presents a compelling opportunity.

Read Next:

• US Banks To Benefit From ‘Higher For Longer’ Interest Rates: Goldman Sachs Sees ‘Modestly Attractive Entry Point’ For Investors

Posted In: BAC