Bank of America Shareholders Hope for Good News this Friday (BAC)

Bank of America Corp. (NYSE:BAC) may rock the market for the good or bad this Friday, Oct 16th and seeing how the U.S. taxpayer has coughed up $45 billion in TARP funds ($1.83 billion paid back thus far) we all have a vested interest in the outcome of BofA's Q3 earnings report.

(WallStNation.com) Sure Bank of America has been running with the Bulls, since the March 09' low BofA shares have rallied back 222% -- remember when it touched $2.53 a share? Wall Street is expecting Bank of America Corporation (BAC), the partially government owned financial giant to report a loss of 7 Cents per share, but could it be worse?


It is estimated the U.S. speculative-grade default rate will decline to 13.9 percent by next June after peaking in the first- quarter of 2010. Shares of Bank of America Corporation (NYSE:BAC) tumbled to the $3 range in March, and have recently been just keeping afloat between $17 and $18 since about August of this year. If you ask iStockAnalyst.com, they will tell you their opinion is that BofA will disappoint.

Since the beginning of the year, Bank of America's shares have gained 24%. In 2008, BAC's shares fell 63% and badly underperformed the 34% decline in the Dow Jones industrial average. Shares are now trading at 19x consensus 2010 EPS estimates. This is inline with the relative valuations of their peer group. While Bank of America continues to look attractively valued for long-term investors, we would not recommend buying stock until after the earnings report given the uncertainty surrounding the company right now.

Depending on the outcome of Friday’s earnings call for Bank of America Corporation (Public, NYSE:BAC), the market could be swayed with it. BofA shares are consistently one of the highest volume leaders on the NYSE (usually second only to Citigroup), and on a typical day close to 170M shares trade hands. There are an unbelievable amount of options riding on BofA's earnings call, take a look at the near the money volume and open contracts on Calls and Puts (each contract represents control of 100 shares of BAC):

OCT Calls

OCT Puts

Best of luck to all BofA longs, let's hope for the good of all investors that Bank of America pulls off a solid call this Friday.

Disclaimer: No positions in any of the securities mentioned in this publication.

SOURCE: http://wallstnation.com/bofa-bac-earnings-call-10152009