Bank of America (BAC 0.27%) stock had quite a good 2024, cruising more than 30% higher in price to notch a convincing beat over the bellwether S&P 500 index. There are more prosperous times in store for the ubiquitous bank, if a recent and bullish analyst take proves to be accurate.
A price bump from a bull
In mid-January, Truist Securities's John McDonald published a new analysis of Bank of America just after the lender reported its fourth-quarter 2024 results. Those figures compelled McDonald to lift his price target incrementally; he now feels the bank is worth $53 per share, $1 higher than his previous estimation. He maintained his buy recommendation on the shares.
According to reports, McDonald's adjustment mirrors his tweaks to profitability estimates for full-year 2025 and the following year. Although he shaved his 2025 per-share earnings estimate by 1%, he raised his forecast for 2026 by the same percentage.
The pundit is expecting the bank to spend lavishly on share buybacks. In his view, repurchases should rise dramatically in the coming two years -- from 2024's roughly $14 billion to $17 billion in 2025 and $24 billion in 2026.
A direct play on the economy
A frothy economy, which has been breaking free of the inflation worries that plagued many Americans, supports a thriving banking sector. Times are good for U.S. lenders, particularly the so-called "big four," of which Bank of America is a member. Assuming the economy continues to hum along, an investment in this high-profile bank with a huge customer base should be a fine way to take advantage of it.
