“We suspect more contraction in the consensus estimate in the coming months as lower operating expenses are slower to materialize than currently expected by the consensus,” writes Stifel analyst Chris Mutascio.
The analyst believes the diminished expectations will weigh on the stock, which has already slowed appreciably after roaring out of the gate at the start of the year.
While Bank of America shares gained 46 percent from the start of the year through last week, against a 15 percent rise for the KBW Bank Index, the bank’s shares are flat since that time, while the KBW index is up 0.8 percent.
“With capital levels seemingly no longer the primary issue, we think it will be harder for the shares to outperform in the face of what we believe are lower earnings expectations that are forthcoming,” Mutascio writes.
TheStreet’s readers are more bullish, according to a recent poll, in which more than 60 percent of respondents argue the rally is just getting started.
Additional News: BofA Cuts US Growth Forecast
Additional Views: A Bullish Play on Financials: JPMorgan
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