UPDATE 1-Analysts cut Bank of America '08 earnings estimates
(Recasts, adds details, share price)
April 22 (Reuters) - Several analysts, including Punk Zeigel's Richard Bove and Oppenheimer analyst Meredith Whitney, cut their 2008 earnings estimates on Bank of America Corp (BAC.N: Cotización) on fears of higher credit costs and loan loss provisions, after the largest U.S. retail bank posted a 77 percent drop in first-quarter profit.
"As declining housing prices continue to weigh on all aspects of the economy, deteriorating credit quality is reverberating through bank earnings as provisions and charge-offs rise," Whitney said in a research note to clients.
On Monday, Bank of America said it expects earnings this year to take an "upward trajectory," even as it posted weak quarterly results, adding that it would not change its "dividend philosophy" but could review it if the environment got "noticeably worse."
Punk Ziegel's Bove, who rates the stock a "buy," said the bank's margins, loans and net interest income were rising at above average rates, adding that it was well capitalized, very liquid and its dividend appeared to be safe.
Bove also said it was likely that the excess reserves created by the bank would be reduced and, at that time, its earnings would move somewhat higher.
David Hilder of Bear Stears also maintained his "outperform" rating on the stock, saying the bank had a premiere national retail and commercial banking franchise, and an attractive valuation.
Shares of the bank were down 56 cents at $37.05 in morning trade on the New York Stock exchange.
Following are the price target and esitmates changes made on Bank of America: Brokerage Rating Price target 2008 EPS view 2009 EPS view
New Old New Old New Old Punk Ziegel Buy $46 $49 $2.88 $2.98 $4.01 $3.96 Bear Stearns* Outperform $46 $52 $3.00 $3.40 $4.00 $4.30 Oppenheimer Perform -- -- $3.00 $3.25 $3.95 $4.15 Lehman Equal Weight $47 $50 $2.80 $3.50 $4.00 $4.30 UBS Buy $44 $47 $2.95 $3.65 $4.50 $4.75 Credit Suisse Neutral $34 $40 $2.70 $3.40 $4.00 $4.40
*Operating earnings estimates (Reporting by Ramya Dilip in Bangalore; Editing by Amitha Rajan)
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