JPMorgan likes Bank of America shares for 2022 as the Federal Reserve prepares to hike interest rates next year. The Fed on Wednesday announced it will aggressively wind down its asset purchases, paving the way for rate hikes next year to fight inflation. The majority of Fed members see three interest rate hikes in 2022 , according to the central bank's projections. JPMorgan says it prefers Bank of America as a "larger beneficiary of higher rates." "We continue to rate Bank of America Overweight relative to our universe, reflecting the benefit from its strong retail franchise, greater sensitivity to long and short term rates, ability to return capital, and lower credit risk," Vivek Juneja said in a note Thursday. Higher rates mean banks charge greater interest on loans, which typically boosts profits. "We expect large banks stocks will likely continue to benefit near term from imminent rate hikes and outperform further as the Fed starts raising rates," Juneja said. In addition to an overweight rating, JPMorgan has a 12-month price target of $50 per share on the stock, 13.8% higher than BofA's close on Wednesday. BofA is beating the market this year, up about 45% versus the S & P 500's 25% gain. Shares rose more than 1% in the premarket Thursday. —CNBC's Michael Bloom contributed reporting.
A Bank of America branch in San Francisco on Jan. 14, 2021.
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JPMorgan likes Bank of America shares for 2022 as the Federal Reserve prepares to hike interest rates next year.