Bank of America (BAC) experienced a 5.3% increase in their stock price following a top-line beat in their second-quarter earnings report. This led to the shares hitting a two-year high of $44.44 and a year-to-date increase of 30.9%. With support at their 50-day moving average, analysts suggest that the stock could continue to rise based on historical trends and current market conditions.
One factor contributing to the potential for further growth in BAC’s stock price is the historically low implied volatility (IV) following their recent peak. Schaeffer’s Senior Quantitative Analyst, Rocky White, analyzed past instances where the stock was near its 52-week high while the Schaeffer’s Volatility Index (SVI) was in the 20th percentile of its annual range or lower. With BAC’s current SVI at 21% in the 11th percentile, these conditions have resulted in the stock being higher one month later in all five previous occurrences, with an average return of 8.2%.
Based on this data, a potential 8.2% increase from the current price of $43.89 could push the stock just below $48, close to its 16-year highs above $50. Despite the positive outlook, some analysts remain cautious, with a consensus 12-month price target of $43.60, slightly lower than the current price. Even after seven analysts raised their price targets, CFRA downgraded the stock to a “sell” from a “hold,” and 11 of 24 brokerages maintain “hold” ratings, indicating mixed sentiment from experts.
Investors will be closely monitoring any shifts in analyst sentiment, as it could impact the future trajectory of BAC’s stock price. With the potential for further growth based on historical trends and current market conditions, the bank stock may have room to continue its upward trend. As the market reacts to the second-quarter earnings report and adjusts price targets, BAC’s performance will be closely watched in the coming weeks.
