May 27 (Reuters) - Rochdale Securities analyst Richard Bove lowered his earnings estimates on Bank of America Corp (BAC.N) for fiscal 2009 and 2010, citing equity dilution due to stock sale.
Bove cut his 2009 earnings estimate on the company to 74 cents per share from $1.08, while the 2010 estimate was lowered to $1.79 per share from $1.87.
However, Bove maintained his “buy” rating and the $14 price target on the stock, saying it remains very attractive in the long run.
Bank of America Corp (BAC.N), the largest consumer bank and the institution with the biggest stress-test capital shortfall, raised $13.5 billion earlier this month.
“It is assumed that the company will continue to issue new shares under its at-the-market sales program until another 0.75 billion are sold. Total proceeds from these additional sales are estimated to be $8.25 billion,” Bove said in a note to clients.
Bove also said that there was some evidence that Bank of America was losing personnel in its Merrill Lynch division and this could hurt the European results for that business.
“The drain is not expected to continue for an extended period and with 300,000 employees, it is likely that this talent can be replaced,” he said.
Bove also said that, on a net basis, the bank will benefit from mark-to-market accounting.
Shares of Bank of America closed at $10.98 Tuesday on the New York Stock Exchange. (Reporting by Santosh Nadgir in Bangalore; Editing by Anil D’Silva)