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Bank of America: Earning Interest

Bank of America (BAC) is well-positioned to gain market share and benefit from increased consumer lending and deposits in 2005, say analysts at Piper Jaffray.

The investment firm upgraded the stock to "outperform" on Monday, calling the company "no longer just your grandma's bank."

Analysts say Bank of America, which generates 66% of its earnings from consumer, small business and commercial banking, should see "healthy growth" in areas such as credit cards, home equity, deposits and commercial lending this year. The company should also continue to benefit from its 2003 acquisition of FleetBoston, analysts say.

Contributing to growth will be the bank's "laser focus" on capturing a greater share of the multicultural marketplace, Piper says. Analysts say the bank has emphasized hiring bilingual tellers, offering free money transfers and catering branch service to Hispanic customers. They note that the bank is already serving many Hispanic customers in "key" urban markets.

Piper Jaffray analysts raised their 2005 earnings per share estimate by a nickel, to $4.10, and set a price target of $51.

At $46, the stock sells at about 11 times the $4.05 per share that analysts, on average, think the company will earn in 2005. That's one of the lowest P/E ratios among the top 50 banks, according to Piper Jaffray. Bank of America also pays a generous annual dividend of $1.80 per share.

--Lisa Dixon

Bank of America Click for larger chart Today's quote Use Stock Finder to make your own stock picks Last closing price: $16.09 200-day moving av.: $12 3-yr. annual return: -27% Trailing 12 mo. P/E: NA Forward P/E: 6 Price-to-book ratio: 1 Price-to-sales ratio: 232.00 5-yr earnings growth: NA PEG ratio: 0.00 More