What is TREFIS?

How do I use this slideshow?
1. The slideshow contains the most important forecasts for a company's divisions, or product lines.
2. Disagree with a forecast? Simply drag the trend-line to test your own what-if scenario, and see possible upside or downside risks for a stock.
3. Plot data for competitors and benchmarks using the "Competition" button.
4. In the slide caption, and the area below the slideshow, see the key trends impacting a given forecast, as well as historical explanations.
5. The first slide shows which one of a company's divisions, or product lines, contribute most to its stock price. Clicking on a division arm of the diagram, you can explore the most important forecasts for the division.
How do we get the historical numbers for this chart?
Trefis has a team of in-house Analysts who gather historical data from company filings and other verifiable sources. The data and sources are available on the Trefis website.
Who came up with the Trefis forecast for future years?
The Trefis team of in-house Analysts considers a variety of factors when projecting any forecast, and their rationale is explained on the Trefis website.
How does my dragging the trendline on the chart impact the stock price?
1. We use forecasts for various business drivers to calculate forecasted Revenues and Profits for .
2. We then use forecasted Profits in a Discounted Cash Flow (DCF) model to obtain the Price Estimate for .
How does Trefis come up with the Price estimate for a company?
The Trefis forecasts are used to calculate future revenues, costs and cash profits for . The future cash profits are then discounted to the present to arrive at the total value of . The total value divided by number of shares outstanding is the Price estimate.

View the complete Trefis FAQ

Trefis Analysts estimate a price of $45.87 for Bank of America's stock, about 12% higher than the current market price. * Consumer Banking constitutes 28% of the Trefis price estimate for Bank of America's stock. * Corporate & Commercial Banking constitutes 28% of the Trefis price estimate for Bank of America's stock. * Wealth Management constitutes 18% of the Trefis price estimate for Bank of America's stock. Less

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COMPANY OVERVIEW

VALUATION HIGHLIGHTS

Consumer Banking constitutes 28% of the Trefis price estimate for Bank of America's stock.
Corporate & Commercial Banking constitutes 28% of the Trefis price estimate for Bank of America's stock.
Wealth Management constitutes 18% of the Trefis price estimate for Bank of America's stock.

WHAT HAS CHANGED?

Latest Earnings

Bank of America posted a better-than-expected set of Q1 2025 results. Revenues stood at $27.4 billion, while net income rose to $7.4 billion compared to $6.7 billion in the year-ago quarter. Net interest income (NII) stood at $14.4 billion, a 3% increase from the previous year, although investment banking fees saw a decline amid lower M&A activity.

POTENTIAL UPSIDE & DOWNSIDE TO TREFIS PRICE

Below are key drivers of Bank of America's value that present opportunities for upside or downside to the current Trefis price estimate for Bank of America:

Sales & Trading

Yield on FICC Trading Assets: Bank of America's trading yield has been around 4.5-6% over recent years. While we estimate yield figures to be about 5.5% going forward, if the division sees a worse-than-expected performance in the coming years, the yield could decrease to 3% over the Trefis forecast period. If that were to occur, there would be a downside of 3% to the Trefis price estimate.
Investment Banking EBT Margin: Bank of America's investment banking business reported margins of around 38% in 2024. We expect the margin figure to increase gradually going forward. However, if these margins fall to 30% over our forecast period, then there would be a downside of about 5% to the current price estimate.

Wealth Management

Wealth Management EBT Margin: Bank of America's wealth management business is critical to its overall business model, as it leverages the bank's strong retail banking presence to cross-sell additional services to existing customers. The wealth management division reported a steady improvement in margins from around 16% in the wake of the downturn to around 25% in 2023 and 2024. While we expect the segment's operating margin to increase gradually going forward, a decline in this figure from increasing competition could push the figure to 20% by the end of our forecast period. This would result in a 4% downside to the Trefis forecast price.

BUSINESS SUMMARY

Bank of America is one of the leading financial institutions in the U.S. and the second-largest U.S. bank by total assets after JPMorgan Chase. Through its operations in the U.S. and certain international markets, the firm offers a range of products and services such as credit and debit cards, mortgages, auto loans, commercial loans, investment banking, wealth management, and sales and trading.Bank of America's clients range from individual consumers to multinational corporations, financial companies, and governments. The firm makes a significant portion of its revenue from lending activities, from which it earns a net interest spread. The bank also generates non-interest revenues such as investment banking advisory fees, asset management fees, and yields on trading assets.

SOURCES OF VALUE

Corporate and Commercial Banking is the most valuable division for Bank of America for the following reasons:

High-Interest Yields in Corporate and Commercial Banking

In 2024, Bank of America's Corporate and Commercial Banking division had over $373 billion in outstanding business loans and close to $546 billion in interest-earning treasury-client assets. We expect these figures to cross $460 billion and $670 billion, respectively, over our forecast period. Further, we expect that Bank of America will earn a net interest yield of roughly 2.4% on these assets.In comparison, Bank of America's Wealth and Investment Management division had about $4 trillion in client assets at the end of 2024 but was earning a fee representing just about 0.40% of these assets. Bank of America also had about $230 billion in private banking loans, which earned an average net interest yield of 3%. The higher interest revenues for the Corporate and Commercial Banking division make it more valuable to the bank than Wealth Management.

Higher Margins in Corporate and Commercial Banking due to Minimal Loss Allowances

Bank of America's provisions within the credit card business decreased from 8% in 2020 to around 1.56% in 2024. We expect margins to gradually improve in both businesses.In comparison, Bank of America's margins within the Corporate and Commercial Banking division have fared much better. It was around 46% in 2024. We expect margins within Corporate and Commercial Banking to remain much higher than those within the credit card and mortgage businesses.

KEY TRENDS

We believe certain key trends will play out in the banking industry going forward:

Strengthening Digital Banking and Wealth Management

Bank of America has been investing in its digital banking expansion while increasing its focus on wealth management. The bank continues to benefit from its Merrill Lynch acquisition, which has positioned it as a key player in investment banking and financial advisory services. Merrill and Bank of America’s private banking segments now manage trillions in client assets.Additionally, the bank has invested heavily in technology and digital banking, with millions of active mobile users. This has allowed it to streamline operations, improve efficiency, and expand its customer base without relying on major acquisitions.

Methodology

Trefis analyzes how a company's products impact its stock price. Using mathematical models to forecast a company's future revenues, costs and cash profits then discounting them to the present, Trefis comes up with a Trefis Price. The Trefis Price is an estimate of the fair or intrinsic value of the company's present stock price.

The selection process

The Trefis tool currently covers 200+ symbols. In building its coverage Trefis selected companies using the following criteria:

Companies with high interest among retail investors were more likely to be selected. Interest among retail investors was judged by percentage of retail ownership, overall volume of news flow, as-well-as general awareness in the marketplace.
Market cap/size: Larger cap companies are more popular and cater to the interests of a larger set of investors/finance site visitors, and as-such were more likely to be selected.
Sector-wise coverage build-out: Trefis also selected to cover companies in the same market, at the same time. For example, when Trefis started covering Apple, covering other companies like Hewlett Packard and Dell in the mobile, and notebooks/desktop markets was a natural next step.

Trefis initially started out covering companies in technology, media and telecom sectors. Since then it has expanded coverage to consumer, automotive, financial services and energy. Trefis is currently building out more coverage within industrials and will be moving into health care over the next year. Trefis also builds out coverage selectively on smaller companies that have high growth potential as well as companies that are in the process of going public and attract interest from finance site visitors and investors.

Trefis does not favor any companies, except follow the selection mechanism outlined above to guide its judgment.

The Trefis tool limitations:

The Trefis price estimate may not converge with market price: The Trefis price estimate is an estimate of the intrinsic value of a company; just like a price estimate that any other Wall Street firm might come up with. Trefis understands that multiple factors, some quantifiable, and some not so easily tackled, influence a company's stock price. Though the Trefis view is a very detailed fundamental model of the business, it is still just a model - an artificial representation of the real company, which is much more complex.
No user modification of structure: While Trefis allows users to modify forecasts for any of the drivers in its analysis of a company; it currently does not allow users to change the structure by adding or removing drivers or divisions.

The Trefis Tool Key assumptions

The Trefis price includes forecasts of a company's fundamental drivers (examples: pricing, units, market share of a company's product lines), which are then factored into the Trefis price estimate for the company's stock.
In addition, Trefis discounts a company's cash flows at a company-specific discount rate. Cash flows beyond the explicit forecast period are accounted for using a terminal growth rate.

IMPORTANT: The projections or other information generated by the Trefis price estimate tool regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results and are not guarantees of future results. Results will vary with each use and over time.

TREFIS helps you understand how a company's products impact its stock price.