Second Look: Is BofA Now Overvalued? (BAC)

Banking, finance, and taxes

Published: March 16, 2012 9:08 am

Last Updated: April 28, 2020 4:34 am

Bank of America Corporation (NYSE: BAC) has been an incredible performer in 2012. If you can believe it, it has almost now doubled from the low of $4.92 in December. The question to ask now is simple… “Is BofA now overvalued?”

One thing that needs to be at least moderately considered is that the $9.24 close on Thursday put BofA shares above the Thomson Reuters consensus price target of $9.08 on the stock. The analysts were wrong on the way down and way too bullish. Are they going to be wrong on the way up as well?

Those who told you to run for the hills missed a massive run. Still, it was the climate of the time and even after Warren Buffett came to the rescue it was touchy and many investors were beginning to feel implosion fears for the bank again.

That was then. The low was $4.92 on December 19 and the stock ended 2011 at $5.55. When we gave our 13,678 DJIA peak target at the start of 2012, BofA’s objective price target was $9.58 at the time. Now the stock is far higher yet the target price is lower. That is the research world in finance for you.

As far as what the real value is, maybe book value will start to matter again. At the end of the last quarter, we noted that the stated book value is $20.09 per share and the tangible book value is now up to $12.95.

JON C. OGG

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