You have to love the phrasing of Opco analyst Chris Kotowski’s latest note on Bank Of America (BAC).
It’s not often that you hear a sell-side analyst use words like this:
Dreadful Quarter, But an Absence of Distress
BAC’s third-quarter earnings per share of $0.56 were driven by a dozen “special” items, some of which seem to recur every quarter, which contributed all the earnings. Still, while the results were weak, the crisis in Europe, thus far at least, has not produced the kind of open-ended trading losses that the mortgage crisis did, despite pretty extreme stress in high yield, Italian and Spanish credit spreads. BAC’s trading results were clearly at the lower end of the peer group range, but again, it is dreadful but not distressing. Capital ratios went up and problem loans went down, and for the moment there were no new adverse developments on the mortgage put-back front…
Kotowski goes on to describe the many ways in which the quarter was horrible, but concludes that, at $6, the stock is “over-sold.”
And this actually puts him in the wildly-bullish camp relative to some other analysts (see below).