Bank of America shares rise sharply supported by Covid-19 vaccine news

Written by: Stanko Iliev
November 12, 2020
  • Bank of America is positioned to weather the COVID-related storms
  • Bank of America's dividend is safe and this stock is not overvalued
  • If the price jumps gain above $28 the next target could be located at $30 or even $32

Bank of America (NYSE: BAC) shares have advanced from $23.2 above $28 in less than five days and the current price stands around $27.3. The technical picture implies that the price may advance above $30 this November but there are also some obvious risks when it comes to buying Bank of America shares.

Fundamental analysis: Bank of America is a stable bank with a good position on the market

Bank of America shares have been moving in an uptrend last several days and for now, there is no signal of the trend reversal. Drugmaker Pfizer announced that it will have a coronavirus vaccine ready in the United States by the end of this year and this adds further support to Bank of America stock.

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When trading this stock, investors should have in mind that Bank of America is a stable bank with a good position on the market. Bank of America reported recently that Q3 net interest income was down 17% from a year ago. It is also important to mention that revenue declined by $2.5B (or 11%) YoY and the Q3 2020 operating results were not well-received by the market.

The size of the decline raised some concerns but even with the COVID-19 pandemic, the business of this bank is going well. Bank of America reported Q3 2020 EPS of $0.51 (beat by $0.01) which is very good for the current situation. The provision expense was $1.4B, which is a significant improvement from the previous two quarters.

The US stock market is still supported by upbeat over the prospect of a divided Congress, COVID-19 vaccine news and less risk of major policy changes. Joe Biden won the presidential election in his birth state of Pennsylvania last Saturday and become 46th president of the United States.

On the other side, concerns about sluggish economic growth amid the ongoing pandemic continue to dominate the financial markets. The US reported over 130K new cases in one day and the pandemic pushed U.S. hospitals to the brink of capacity.

There are some risks when it comes to buying Bank of America shares but BofA’s stock is attractively valued currently and according to analysts, this bank is positioned to weather the COVID-related storms.

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Technical Analysis: Bulls are in control of the price action

Data source: tradingview.com

When we take a look at the chart above ( one year period), we can see that the price of this stock has weakened from $35 to $17.95 and then started to raise. On this chart, I marked important resistance and support levels.

The important support levels are $26 and $24, $28 and $30 represent the resistance levels. If the price jumps above $28 it would be a “buy” signal and we have the open way to $30.

Rising above $30 supports the continuation of the bullish trend and the next price target could be located around $32. If the price falls in the upcoming period, every price in a range from $20 – $25 could be a very good opportunity to invest in Bank of America shares.

Summary

Bank of America shares have been moving in an uptrend last several days and for now, there is no signal of the trend reversal. Bank of America’s dividend is safe and the company is handling the coronavirus threat very well. Bank of America has paid more than $18B dividends to its shareholders in the last three years and this number can be even bigger in the future. Drugmaker Pfizer announced that it will have a coronavirus vaccine ready in the United States by the end of this year and this adds further support to Bank of America stock.