Bank of America Corp (NYSE: BAC)’s stock price may have finally become “cheap” according to Nancy Bush of NAB Research, who recently described the stock as inexpensive compared to its peers in a research note dated Tuesday.
“This stock has finally gotten cheap enough – period,” she wrote. Bush said that the bank’s new management team will be more careful about acquisitions and will continue to get rid of non-core assets, including those that came along with Merrill Lynch in 2008.
“Selling at 1.18X tangible book value—the standard which we prefer to use, given the vagaries of the present economic outlook – this is the cheapest of the major banks that is not in a scenario of continued losses and ongoing book-value destruction.”
Bush believes that revenue will decline from new regulatory restrictions, however those setbacks will be offset by improvements in credit quality.
“When you have done as many deals as that company has done and when you picked up Merrill, which itself has done a number of deals, some of them very questionable, there has got to be more stuff there on a strategic basis they can sell,” Ms. Bush told DealBook. “So they will be picking through the detritus of Merrill Lynch to try to find further things they would like to sell, maybe some more stuff in asset management.”
