Citi warns Bank of America’s high valuation leaves little room for upside. Analyst Keith Horowitz downgraded the bank stock to neutral from buy while reiterating his price target at $40, a gain of just 4.1 percent from Friday’s closing price. “BAC is a high-quality franchise that is doing well and can be a good hedge against upcoming market and economic uncertainties due to good deposit franchises and credit risk,” he said. lower use of BAC. “While we believe the stock could perform well on a relative basis in the event of a decline, we do not see much upside on an absolute basis as the stock is currently trading below the midpoint. average on our implied cost of equity index, reflecting a high valuation and leaving little room for much expansion.” Horowitz said the risk is “slanted to the downside” in 2023 for Bank of America when it comes to net interest income, which looks at the difference between the bank’s return on assets and interest liabilities. He cited a “more cautious view” on future deposits and added that headwinds on net interest income “seem to have been given enough weight” for the banking giant. . “In summary, we see the risk tilted to the downside for [net interest income] Consensus estimates for 2023 for BAC vs. past where stocks are boosted by positive NII corrections due to lower premium in the morning (which is happening now), money basis less sensitive deposits and the impact of forward swaps on [available for sale] Horowitz said 4Q22 portfolio,” said Horowitz. The analyst lowered his full-year 2023 earnings-per-share estimate by 10 cents to $3.65. He also cut his estimate. cut its 2024 earnings-per-share estimate by 5 cents to $4.40. Credit card solvency may have a smaller impact than initially feared, although it’s still too much. early to call and a “wildcard.” He also said regional banks may be in a better position and an increase in capital requirements could affect profitability in that region He said: Other comprehensive income may also be lower, although the bank would not benefit as much as it is hedged elsewhere. To be sure, he said this outlook and his expectations for the stock’s future performance could be affected by a rate hike or Bank of America’s 13.7 percent drop this year, which that means it underperforms the financial sector of the S&P 500, which lost 8.4% — CNBC’s Michael Bloom contributed to this report.