Bank of America could see its profits take a hit over the next year as long-term interest rates continue to fall, Raymond James says.
Raymond James downgrades Bank of America on concerns that a fall in long-term rates and even more Fed cuts could pressure profits.
Bank of America CFO Paul Donofrio cautioned investors earlier this year that net interest income could slow to about 1% this year if the Federal Reserve cuts interest rates twice.could see its profits take a hit over the next year as long-term interest rates continue to fall and "the potential for several additional rate cuts" from the Federal Reserve threaten the bank's income growth, Raymond James said in a note published Thursday.
"We now see its greater than peer asset sensitivity positing a greater challenge to net interest income given further flattening of the yield curve and the potential for several additional rate cuts from here," analyst Michael Rose wrote. "In turn, we see waning prospects for the company to generate positive operating leverage next year," which warrants a move to the sidelines.
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