"Many are underestimating the bank's ability to mitigate risk-weighted asset inflation and adapt to the changing environment," wrote Glenn Schorr of Nomura. He has a "neutral" rating on the bank.
Bank of America plans to scale back private-equity investments, run off a loan portfolio and may sell mortgage- servicing rights to reduce so-called risk-weighted assets monitored by regulators. The company projects it will lower the holdings by as much as $250 billion to achieve its goal of $1.8 trillion in the assets by the end of 2012.
The bank is weighing the sale of at least part of its $21 billion stake in China Construction Bank Corp., three people briefed on the plans said last month. The sale would simultaneously raise cash and reduce assets that are penalized under the Basel standards.
Bank of America wouldn't need more capital unless there was "material weakness in the U.S. economy or lower home prices from current levels," wrote Burnell, who has an "outperform" rating on the shares.
Michael Mayo, the Credit Agricole Securities USA analyst who challenged Moynihan yesterday about the bank's ability to withstand a ratings downgrade or losses on European bets, said today that he doesn't foresee a capital raise in his "base case." He said the stock will probably trade at $11 a share in 12 months, compared with his previous estimate of $14.