BAC: Model Update: Adjusting Earnings Estimates

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BAC: Model Update: Adjusting Earnings Estimates

economic expectations. Our downturn.

price target and implied return support our Outperform rating. • Return of capital: In August 2025, BAC announced that its

Board of Directors has authorized the repurchase of up to

Upside scenario $40 billion of its common stock over time. BAC repurchased

Our upside scenario of $71 assumes stronger than expected $7.2 billion in common shares during 1Q26.

economic growth with inflation moderating over the next • Global Banking: As one of the leaders in global banking,

12 months combined with the Federal Reserve cutting the BAC has relationships with 78% of the Global Fortune 500.

Federal Funds rate an additional 50-75 basis points over the Additionally, its investment in digital technology is driving a

next 12 months. Additionally, the outlook for profitability scale business to higher highs.

proves to be better than expected. • Impressive franchise: BAC has successfully grown its deposit

market share - it had $2.02 trillion in total deposits and

Downside scenario $951 billion in total consumer banking deposits as of 1Q26

Our downside scenario of $46 assumes inflation is persistent that had an average cost of 51 basis points, providing

and far exceeds the Federal Reserve’s 2.0% target throughout evidence that the company is on the offensive. Additionally,

the next 12 months, forcing the Federal Reserve to pivot and we believe the company’s mobile offerings are among the

start raising the Federal Funds rate, resulting in a recession in best in the industry, and as usage increases, we expect BAC

2027, which lowers earnings and profitability. to see an increase in its profitability and earnings growth.

• Attractive valuation: Relative to its peers, we see the shares