Deregulation Price Catalyst Spurs Bank of America Stock (BAC) Bulls
Bank of America (BAC) is standing at the edge of a transformative moment. A wave of deregulation is about to sweep through the financial sector, promising to loosen the tight capital and compliance rules that have weighed on banks for years.
Confident Investing Starts Here:
Easily unpack a company's performance with TipRanks' new KPI Data for smart investment decisions
Receive undervalued, market resilient stocks right to your inbox with TipRanks' Smart Value Newsletter
For BAC, this could mean more cash to lend, fatter investment banking fees, and juicier shareholder returns. While the stock has climbed to new 52-week highs, it is still priced as a value play. Therefore, I'm Bullish on BAC stock.
Unleashing Lending Power Through Deregulation
Momentum is building around deregulation, with major banks like Bank of America (BAC) poised to benefit. Potential rollbacks to Basel III capital requirements could unlock billions by lowering reserve thresholds, giving BAC more room to lend. In Q1, the bank reported $14.44 billion in net interest income on its $2 trillion deposit base, and analysts suggest that a looser regulatory environment could increase this figure by 6–7% this year, meaningfully boosting earnings.
At the same time, compliance costs—long a drag on profitability—may finally ease. BAC's recent removal from a consumer watchdog's oversight hints at a broader regulatory reprieve. If oversight continues to soften, the bank could not only lower expenses but also redirect capital toward growth areas like small business loans and mortgages.
Capital Markets Ready to Roar
Bank of America's investment banking and trading divisions stand to gain significantly from a potential wave of deregulation. Looser rules tend to drive M&A activity, IPOs, and market volatility—ideal conditions for BAC's Global Markets unit. In Q1, equities trading revenue surged 17% to a record $2.2 billion, and fixed income climbed 5% to $3.5 billion, as Main Street Data shows.
While investment banking fees dipped 3% to $1.5 billion, reflecting a broader slowdown in U.S. M&A, CEO Alastair Borthwick pointed to a strengthening deal pipeline. A more business-friendly climate under the Trump administration could accelerate this recovery.
Meanwhile, the ongoing market resilience, even amid geopolitical tensions, signals investor optimism regarding pro-growth policies.
For BAC, that translates into more opportunities to capitalize on volatility. Should deregulation spark renewed corporate deal flow—or support BAC's push into digital assets, such as its proposed USD-backed stablecoin—the bank could unlock new revenue streams and deepen its market advantage.
Shareholder Returns Set to Shine
Deregulation could be a goldmine for BAC's shareholders as well. With less capital tied up, BAC can ramp up buybacks and dividends. In Q1, earnings rose 11% to $7.4 billion, backed by a robust Common Equity Tier 1 ratio of 11.8%, well above the 10.7% minimum. This gives BAC plenty of room to return capital if these ratio requirements go down.
Today, it has a $0.26 quarterly dividend yield of 2.25%, which the company has grown for 11 straight years, with 16 years of dividend growth to boot, according to TipRanks data.
Meanwhile, projected buybacks for the year reach $18 billion, screaming confidence. In fact, BAC trades at a buyback yield of 4.3% on recent repurchases, which, along with the dividend, form a blended yield of 6.5%. Not bad for a company expected to see notable growth in the near term. In the meantime, the payout ratio stands at just 28.4% this year's consensus EPS estimate of $3.66, so an acceleration in the rate of dividend hikes is indeed possible.
A Bargain Hiding in Plain Sight
At today's share price, BAC stock is trading at its 52-week highs, but in my view, it's still a steal. Consensus EPS estimates project 14% growth to $3.66 in 2025, followed by an acceleration to 17% growth to $4.25 in 2026.
Yet, BAC trades at just 12.7x 2025 EPS, which is significantly below that of some of its competitors. For context, JPMorgan's (JPM) 15x and Wells Fargo's 13.5x multiples are higher, despite BAC outpacing their growth forecasts.
Tariff fears and potential rate cuts (which could possibly shave $3.3 billion off net interest income if rates drop 100 basis points) could spook investors. However, BAC's strong wealth management inflows and trading gains suggest that the impact may not be as harsh on a consolidated basis.
What is the Price Target for Bank of America?
Wall Street's stance on Bank of America stock is quite bullish. As things stand, BAC carries a Strong Buy consensus based on 18 Buy and two Hold ratings in the past three months. BAC's average 12-month price target of $49.50 implies a potential upside of approximately 6%, suggesting that many analysts believe the stock could continue to rise despite trading just below 52-week highs.
Deregulation Tailwinds Could Power Next Leg of BAC Growth
Bank of America is approaching a pivotal moment, with potential deregulation poised to unlock fresh growth opportunities. Positioned to boost lending, energize its capital markets division, and enhance shareholder returns, BAC looks compelling—especially at just 12.7x earnings and with EPS expected to rise 14–17% in the near term.
While macroeconomic risks, such as trade tensions and interest rate shifts, remain, the bank's strong balance sheet and diversified operations provide a solid foundation for continued performance and investor upside.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Globe and Mail
34 minutes ago
- Globe and Mail
Are Quantum Computing Stocks Becoming the Next AI?
Investors flocked to artificial intelligence (AI) stocks last year, and they drove market gains, leading the S&P 500, the Nasdaq Composite, and the Dow Jones Industrial Average higher. Today, these players continue to advance, and they're joined by certain stocks in the high-potential field of quantum computing. In fact, quantum computing stocks might be following in the footsteps of AI stocks, becoming the next industry to lead market gains, and here's why. Why AI became so popular First, though, it's important to understand why AI grabbed the world's attention in recent years. This technology has the potential to revolutionize the way things are done -- from business to our daily lives -- by introducing more efficiency into processes. AI also can help companies develop new and better products -- from therapeutics to autonomous vehicles -- faster. So, AI can be a gamechanger, and experts have even likened the technology to the development of the steam engine, or in more recent days, the internet. Companies powering AI, such as AI chip leader Nvidia and networking giant Broadcom have seen their shares surge -- and so have companies offering AI infrastructure, like Amazon, or those developing AI platforms and applying them to their businesses. A good example of that is Meta Platforms, which trained AI model Llama, a tool that powers its popular AI assistant. Today, AI continues to be an interesting growth story, and there are plenty of chapters left in this exciting book. But quantum computing may be even earlier in its growth story -- and also promises to become a game changer. Investors generally like getting in on an investing theme early to fully benefit as it develops. So, what exactly is quantum computing? It's a type of computing that relies on the principles of quantum mechanics, or how subatomic particles interact. In quantum computing, the computing is done by qubits rather than the bits used in traditional computing. Their ability to process data as a zero, a 1, or both at the same time, and the combining of many of these qubits allows for the solving of problems that have been impossible for classical computers. D-Wave's record quarter Several pure play companies are publicly traded and are working toward making this process useful for real world problems. In fact, D-Wave Quantum (NYSE: QBTS) recently launched its Advantage2 quantum computer to be used in fields such as business optimization or AI. D-Wave, thanks to sales of its Advantage system and services, in the recent quarter said revenue soared 500% to a record $15 million -- the increase in revenue shows customers are interested in such technology, and the revenue level shows there still is plenty of room for gains as this technology develops. Though D-Wave and others such as Rigetti Computing and IonQ are generating revenue from certain systems and services, quantum computers haven't yet even come close to reaching their full potential. The good news here is that means, if research and development goes well, revenue could explode higher down the road -- making now an excellent time to get in on these players. The big difference between AI and quantum computing today is AI is more regularly and easily applied to real world problems, while quantum has significant challenges to conquer. For example, qubits are fragile and can only hold information for a short period of time. Other challenges are error rates and difficulty scaling quantum systems. All of this makes quantum computing stocks higher risk right now than AI stocks -- but, considering the promise of quantum computing, investing in these stocks could lead to enormous returns over time if the technology is successful. Should you invest in quantum computing stocks? What does this mean for you as an investor? If you're an aggressive investor looking for the next big thing in technology, you may consider buying shares of some of the leading pure play companies such as the players I've mentioned above. If you're cautious but still interested in the field, you could opt for well-established tech giants such as Alphabet or Microsoft that also have quantum computing programs. It's still too early to say how successful quantum computing will be over time, but companies have made progress recently, and potential is strong. That means quantum computing stocks could become the AI stocks of 2025 -- and help lead the overall market higher. Should you invest $1,000 in D-Wave Quantum right now? Before you buy stock in D-Wave Quantum, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and D-Wave Quantum wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $687,731!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $945,846!* Now, it's worth noting Stock Advisor 's total average return is818% — a market-crushing outperformance compared to175%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of June 23, 2025 Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Adria Cimino has positions in Amazon. The Motley Fool has positions in and recommends Alphabet, Amazon, Meta Platforms, Microsoft, and Nvidia. The Motley Fool recommends Broadcom and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
Globe and Mail
an hour ago
- Globe and Mail
Chevron Is Boosting Its Commitment to Support This Key Energy Transfer Project
Energy Transfer (NYSE: ET) has spent the better part of the past decade working to turn its Lake Charles facility from a natural gas import terminal to a liquefied natural gas (LNG) export facility. It has faced several setbacks along the way, including losing its joint venture partner, Shell. Because of competition and market conditions, it has also struggled to secure enough commercial customers to support the facility. However, Lake Charles LNG is another step closer to becoming a reality after Chevron (NYSE: CVX) agreed to increase its volume commitment. That deal and other recent agreements put Energy Transfer within sight of finally making a final investment decision (FID) on this large-scale project. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue » Adding to its allocation Energy Transfer has signed an incremental sale and purchase agreement with Chevron for additional LNG supply from its proposed Lake Charles LNG export facility. The 20-year agreement increases Chevron's total contracted volume by 1.0 million tonnes per annum (mtpa), boosting its total allotment to 3.0 mtpa. The oil giant signed its initial 2.0 mtpa deal with Energy Transfer last December. The deal will enable Chevron to grow its global gas business. Chevron operates several LNG facilities around the world. It also buys gas from third-party terminals. This strategy provides the global energy giant with a diverse, reliable, and flexible network of supplies to help meet the world's growing need for the cleaner-burning fuel. Meanwhile, the agreement puts Energy Transfer another step closer to the full commercialization of the project. It recently inked a 1.0 mtpa deal with one of Japan's leading energy companies, Kyusha Electric Company. In addition, MidOcean Energy has agreed to take 5.0 mtpa as part of its strategic partnership with Energy Transfer, where it will also take a 30% equity stake in Lake Charles LNG. Specifically, it would get 30% of the LNG production while funding 30% of the project's cost. Energy Transfer has also previously signed contracts with several other shippers, including Shell, for some of its LNG capacity. A needle-moving project As currently designed, Lake Charles LNG would have nearly 16.5 mtpa of liquefaction capacity. Energy Transfer had signed contracts for 10.4 mtpa when it reported its first-quarter results in early May. It's in discussions with other shippers regarding the remaining capacity. It aims to secure 15.0 mtpa in contracts to approve the project. In addition, Energy Transfer wants to bring on more equity partners. It's open to energy companies like MidOcean that will take LNG capacity as part of their investment, as well as infrastructure investors. It wants about 75% to 80% of the project funded by equity and infrastructure partners. The master limited partnership (MLP) hopes it can make an FID on the project by the end of this year. Lake Charles LNG would be a needle-moving project for Energy Transfer. The midstream giant would generate stable fee-based cash flow backed by LNG contracts from its retained stake in the project. On top of that, the company expects the project to fuel significant natural gas volume growth. It should boost volumes on its existing pipeline systems and provide the MLP with opportunities to expand its pipeline capacity. The growing gas volumes would provide Energy Transfer with substantial incremental earnings across its pipeline operations. Getting closer Energy Transfer continues to make progress toward finally approving Lake Charles LNG. Chevron's decision to take incremental capacity pushes it closer to its commercialization goal. Chevron's increased commitment is also a vote of confidence that should make the project more appealing to potential equity investors. Building Lake Charles LNG would be a big deal for Energy Transfer. It would provide the MLP with two meaningful sources of future incremental cash flow: its retained equity stake and volume growth across its gas pipeline system. That would give the MLP even more fuel to grow its high-yielding distribution in the future. Given this project's potential, it's a key catalyst for investors to monitor. Should you invest $1,000 in Energy Transfer right now? Before you buy stock in Energy Transfer, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Energy Transfer wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $687,731!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $945,846!* Now, it's worth noting Stock Advisor 's total average return is818% — a market-crushing outperformance compared to175%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of June 23, 2025
CBC
an hour ago
- CBC
Abandoned pets are overwhelming this Montreal shelter — and moving day will make things worse
While the Montreal SPCA says most pet surrenders are due to financial stresses, another factor is no-pet clauses in rental housing, which force many people to make difficult decisions when moving.
