Citigroup cut Bank of America's share-price target to $18 from $20 Thursday, predicting a loss in the second quarter and a big writedown on Merrill Lynch debt.
Citigroup , which kept its "buy" rating on the stocks, said it sees BofA reporting a loss per share of 11 cents in the second quarter, compared with its prior profit view of 34 cents a share.
In a research note, Citigroup analysts said the second-quarter loss estimate of BofA reflected the bank's capital raises and all one-time items.
Citi said Bank of America may suffer a $2 billion mark-to-market loss in the second quarter due to Merrill Lynch's debt and that it is likely to incur an Federal Deposit Insurance Corporation assessment charge of $875 million for the same quarter.
The second quarter is likely to be a challenge for Bank of America, but its reserve build may have peaked, Citigroup said in the note.
Citi said it also expects the bank to revise its loan loss provisions to be up compared with the elevated first-quarter figures.
Bank of America's shares closed 1 percent higher at $12.35 on Wednesday in the U.S.
Rep. Darrell Issa, R-Calif., alleged in a statement released Wednesday that the Federal Reserve "engaged in a cover-up," deliberately hiding concerns about the merger of the bank with Merrill Lynch from other regulators.
Fed Chairman Ben Bernanke will Thursday appear before the House Oversight Committee to testify on his role in the merger.