- Q3 net interest income was down 17% from a year ago
- Revenue declined by $2.5B (or 11%) YoY and the size of the decline raised some concerns
- Bank of America is positioned to weather the COVID-related storms
Bank of America (NYSE: BAC) shares have further selling pressure after a drop in Q3 net interest income and the current price stands around $24. When trading this stock, investors should have in mind that Bank of America is a stable bank with a good position on the market.
Fundamental analysis: Q3 net interest income was down 17% from a year ago
Bank of America is an American multinational investment bank and financial services holding company. This is one of the „Big Four“ banking institutions of the United States and it services approximately 10.73% of all American bank deposits.
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Bank of America reported recently that Q3 net interest income was down 17% from a year ago. It is also important to mention that revenue declined by $2.5B (or 11%) YoY and the Q3 2020 operating results were not well-received by the market.
The size of the decline raised some concerns but even with the COVID-19 pandemic, the business of this bank is going well. Bank of America reported Q3 2020 EPS of $0.51 (beat by $0.01) which is very good for the current situation.
The provision expense was $1.4B, which is a significant improvement from the previous two quarters. If we compare total stockholders’ equity of $268B and the market capitalization of $209B, we can notice that this stock is not overvalued.
Another useful information for potential investors is that this company has paid more than $18B dividends to its shareholders in the last three years and this number can be even bigger in the future.
BofA’s stock is attractively valued currently and according to analysts, this bank is positioned to weather the COVID-related storms. This stock could be a good long-term investment but maybe now is not the best moment for buying Bank of America shares because the price could weaken even more in the upcoming weeks.
Technical analysis: $20 represents a very strong support level
Bank of America shares have significantly underperformed the broader market so far in 2020. When trading Bank of America, you should have in mind that the price could weaken even more in the upcoming weeks.
On this chart, I marked important resistance and support levels. The important support levels are $22 and $20, $26, $28 and $30 represent the resistance levels.
If the price jumps above $26 it would be a signal to buy this stock and we have the open way to $28. Rising above $30 supports the continuation of the bullish trend and the next price target could be located around $35.
On the other side, if the price falls below $22 it would be a “sell” signal and we have the open way to $20.
Summary
Bank of America reported recently that Q3 net interest income was down 17% from a year ago. The Q3 2020 operating results were not well-received by the market but this stock could be a good long-term investment with a generous yield and solid growth prospects. The negative results were impacted by the COVID-19 pandemic but the business of this bank is not compromised. My opinion is that this stock could be a good long-term investment but maybe now is not the best moment to invest in Bank of America shares because the price could weaken even more in the upcoming weeks.
