Bank of America Dip Resets Valuation for Big Gains

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Bank of America’s Rock-Bottom P/E and 25% Upside Potential

Written by Sam Quirke on January 28, 2026 

Bank of America office building exterior with logo signage, representing BAC amid stock pullback and low valuation.

Summary

  • Bank of America trades at one of the lowest valuations among mega-cap stocks, even after a strong rally over the past year.
  • A recent pullback has provided some time to take profits without breaking the broader uptrend, improving the risk-reward setup.
  • Recently refreshed price targets point to solid upside potential heading into February. 

Financial giant Bank of America Corp (NYSE: BAC) did almost everything right in 2025. The stock logged a powerful rally, hit a record high, and finished the year in strong form. It even pushed on to fresh all-time highs in the first few trading days of January, and the bulls looked set to remain in control in 2026. 

Then things cooled. A pullback set in, gathering pace after the bank’s earnings report two weeks ago, and knocking roughly 10% off the share price. On the surface, it has not been a great start to the year. But zoom out, and the picture isn’t actually that bad. The broader uptrend remains intact, selling pressure is already starting to look tired, and the stock’s valuation has reset to one of the lowest price-to-earnings (P/E) multiples among mega-cap stocks today.

With analysts falling over themselves to rate shares a Buy and many calling for an upside of at least 25%, Bank of America is quietly shaping up as one of the more interesting large-cap setups in the market heading into February. Let’s take a closer look.

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An Attractive Valuation

With a current reading of sub-14, Bank of America’s P/E ratio is officially the lowest of all mega-stocks right now. For those of us on the sidelines who believe the recent selling is more of a pause than the start of a reversal, that makes for a solid buy-the-dip opportunity. 

When a stock dips like Bank of America did in the week before its quarterly earnings report, and then continues to fall following its release, you’d expect the report to have been bad.

However, Bank of America delivered yet another solid report, topping expectations on both revenue and earnings, impressing with its operating leverage and reporting provisions for credit losses that came in well below forecasts.

With that in mind, January’s pullback appears to have been driven more by broader market forces than any deterioration in Bank of America’s prospects.

Rising geopolitical tensions have been weighing on equities in recent weeks, and it looks like Bank of America’s shares were simply caught up in that shift to risk-off sentiment.

The lack of any major follow-through this week all but confirms the weakness was macro-driven. With the uptrend still intact and selling pressure starting to look tired, the stock’s resulting lower P/E ratio makes for a particularly interesting risk/reward profile. 

Analysts See Meaningful Upside From Here

Adding to the sense that the market has been too negative is the fact that many analysts are calling Bank of America a red-hot Buy right now. The team at Goldman Sachs just reiterated its Buy rating while boosting its price target on the stock to $67. 

Their call echoes similar moves from Morgan Stanley and TD Cowen, both of which reiterated Buy or equivalent ratings earlier this month with price targets of $64. Those targets imply an upside of more than 25% from current levels—not bad for a stock with a rock-bottom valuation. 

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Risks Remain, But Are Largely Known

There are still some headwinds for the stock to contend with as we head into February. One of the more prominent is the proposed 10% cap on credit card interest rates announced earlier this month. If implemented, it could pressure profitability across parts of the consumer banking business.

That said, the market has had time to digest this, and the recent pullback likely has priced in that uncertainty. Plus, Bank of America’s diversified revenue base and scale provide a buffer from potential rate caps that smaller peers may lack.

Still, the bulls will need to stay strong in the coming sessions to prove that they’re back in control. Last week, the stock hit a deep low, and while it’s bounced since then, it remains to be seen if the $52 level is a hard floor. 

If that floor holds, don’t be surprised to see the stock trade into the upper $50s or mid-$60s by the end of the quarter. 

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I was born on 6 August 1956 in San Francisco, California to Janet and (the late) Richard Hovis. I grew up in Santa Monica, California where I attended elementary, junior high school, and high school (graduating in 1974), in addition to involvement in sports and recreation (Little League +, the Boy’s Club ++). Further, it was in elementary school – St. Augustine’s By-the -Sea Parish School that I found, and made the choice to truly journey with God. I attended Arizona State University from 1974 to 1977 – seeking to become an architect, however, I was not accepted, and, as such, I graduated with a Liberal Arts degree. Upon graduation from Arizona State University, I attended Cal Poly San Luis Obispo and studied City and Regional Planning at the Master’s level. I successfully completed one (1) year in a two (2) year program – I did not complete the Master’s degree in City and Regional Planning – due to personal reasons. I returned to Santa Monica where I started (October 1979) my career as graphic designer with Exxon Company, USA. I spent five years with Exxon Company, USA. While working with Exxon Company, USA I was accepted into architectural school – Sci-Arc in Southern California, however, I did not attend preferring to stay with Exxon.. In 1982 I married Laura Flosi and in April 1983 we had our one and only child – Lauren Alain Hovis – a gift from God. We moved to Phoenix, Arizona in 1984 from Los Angeles, where I went to work as a graphic designer with Kitchell CEM (from 1985 -1987). From 1987 – 1995 I was an independent contractor, and a registered representative in mortgage finance, financial management, graphic design, and drafting. Further, I attended the University of Phoenix and successfully obtained a Master’s in Business Administration (MBA) in 1982. I was also a member of the Scottsdale Jaycees, where I became very involved in community events and projects. In 1994, I accepted a cartography position with the Defense Mapping Agency in Reston, Virginia. As such, I relocated from Phoenix to Reston. In 1998, I was accepted and worked as a Visual Information Officer with the Central Intelligence Agency. In 2002, I worked as a Support Officer until my retirement (due to a need for shoulder surgery) in September 2018. Away from my Federal Government service, I have been involved in various organizations and activities in Northern Virginia. In November of 2011, I married Rebecca Ouellette in Santa Monica, California. I reside in San Tan Valley, AZ with my two hamster - Jess and Timothy, our fish, our lizard - RJ Lizard., and our cats - Pearl and Grey. As to hobbies, I enjoy playing sports, attending sporting events, mentoring individuals from financial management to hamsters, building models, photography, travel, multimedia design, managing partner for RJ Hamster, and jazz – smooth jazz to a samba or a bossa nova. Love and God Bless, Peter – aka RJ Hamster Jo hi

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