Bank of America stock forecast – will it go up or down, and is it worth buying?

Bank of America stock forecast for 2021 and beyond. Will BAC continue to rise?

Bank of America is a veritable institution. Dating back to the 18th century, it is second only to JPMorgan Chase as the largest bank in the United States by assets, holding $2.26trn. 

Under the leadership of CEO Brian Moynihan, it has survived the financial crisis of the late 2000s and early 2010s and looks set to bounce back from the COVID-19 pandemic, too. But what of the future? What does the Bank of America (BAC) stock forecast look like? 

First of all, Bank of America is in a relatively strong position. It’s rich in assets and uses them well. It’s also reinvesting more than half its profits back into the company, meaning that overall company growth is highly likely. 

Current position

At the time of writing, the stock price is $42.05. That’s more than it reached at the close of play on 29 April, when it hit $41.11. That was after it rose for a comparatively unusual six-day period, climbing by more than 6% over a fortnight.

Although the price of BAC stock dipped to $40.53 by the end of April, it then rose again the following week, hitting $42.13 at the close of trading on 7 May.

While it is to be expected that there will be days when it falls back, BAC stock predictions appear to be following this upward trend. 

Some analysts’  Bank of America stock forecasts predict it reaching $80 per share in 2025, which is nearly double its current price. 

With this in mind, it certainly looks possible that it could reach $50 per share by the end of 2021.

The consensus surrounding Bank of America stocks is that they will continue to rise. The bank itself has a forecast annual earnings growth rate of 16.1% which, while small in comparison to the S&P 500 Diversified Banks earnings growth estimates of 50.74%, is still significant.

The bank has also made use of new technology to create efficiencies in its operation, meaning that there is a strong potential for both growth and profit.

Past form

Things have been going well for Bank of America for some time now. Since Brian Moynihan took over as CEO in January 2010, the price has climbed from around $15 to its current high.

Although there was a dip in its share price last year, with the recovery from the COVID-19 pandemic gathering strength and the company having plenty in reserve, there is every reason to think the Bank of America stock forecast for 2021 will be a good one. 

What to look out for

There are always risks with stocks, however. Although all the BAC stock predictions are broadly optimistic, things can change. We are still in a global pandemic, and another significant coronavirus wave in the United States could potentially have an impact on stock prices. As the company's share value has been increasing for some time now, it’s inevitable that it  will drop some days. It should be in a good position to recover any lost ground quickly, but things outside of the bank's scope could end up hitting the stock price. While the overall Bank of America stock prediction is positive, it should not be seen as set in stone. The bank is currently testing a support level at $38.74, but if it fails, then it risks falling to its next support level, which is as little as $37.66.

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Nevertheless, the Bank of America stock forecast appears to be upbeat overall. A combination of good corporate governance, a strongly recovering sector, smart in-house efficiencies and a cautious, sustainable approach to shareholder dividends means that the bank looks like it will remain successful for some time yet. 

Although we cannot be 100% certain, it does seem likely that the Bank of America stock forecast for 2021 and the coming years is strong. While it may not pay out the highest dividends in the sector, it should continue to return a profit for investors for a while.

Bank of America
Daily change
37.69
Low: 37.52
High: 37.79

BAC FAQ

Will Bank of America stock go up?

It should. The general trend for the stock over the last year or so has been positive, especially over the last six months. At the time of writing, the Bank of America stock price is $42.05, which is a substantial increase compared with the $23.68 it was worth on 4 November 2020. 

If we look at the longer term, it is now at its highest level since February 2008. In other words, it is almost at pre-Great Recession levels. A word of caution, though – the value of stocks can fall quite dramatically. For instance, it was $35.35 at the end of December 2019 but fell to $20.03 in early April last year. If you had kept hold of the stock, however, you would have made money, so rises are also possible, if not certain.

Bank of America stock – buy or sell?

The consensus for the Bank of America share price is that it will continue to move upwards. This means that it’s a good time to buy the stock. Banks across the US are seeing growth, making this a good time to get hold of shares in Bank of America. The yield curve is steepening and, with the bank making good, efficient use of new technology and reducing costs, as well as containing its reserves, things look as if they will continue being positive for a little while yet. 

Although it is not certain, it seems likely the shares will continue to rise in value, with some analysts predicting the Bank of America stock price could reach $50 by the end of the year. Bank of America has, it seems, weathered the coronavirus pandemic well and remains in a fairly strong position. If you already have the stock, it is probably worth holding on to for now. 

Is Bank of America a good dividend stock?

In the long term, Bank of America has been a reliable, albeit modest dividend stock. The most recent dividend payment in March this year was a relatively modest $0.18 – the same amount it has paid out every quarter since July 2019, but it has improved progressively since the financial crisis of 2008. From January 2009 to June 2014, it only returned $0.01 per share.

However, since dividends are paid out of a company's income, having a relatively small dividend is not necessarily a bad thing. If a company's dividends are too high, it runs the risk of losing money, meaning the overall value of a stock will fall, which can be a problem for current investors. 

It is also encouraging to see a 6.4% increase in dividends per share over the past five years. So, in the long term, Bank of America looks like a stock that should continue to pay dividends.

FURTHER READING: Pfizer stock price forecast: how will the COVID-19 vaccine affect its bottom line?

FURTHER READING: Peloton stock forecast: can it overcome product recall?

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