Bank of America to Report Earnings: $50 Resistance Proves Stubborn for BAC

Bank of America's stock (NYSE:BAC) is retesting a push through $50 today, heading in to its third-quarter 2025 financial results tomorrow morning. Results from the call, and commentary surrounding the outlook, could determine whether the financial giant can finally hold a break through the persistent $50 resistance level. 

Analysts project that Bank of America (BAC) will report earnings per share (EPS) of $0.95, up from $0.81 a year ago, representing a 17.3% year-over-year increase. Revenue is expected to reach $27.46 billion, reflecting 8.34% annual growth. 

The market's reaction to BAC's upcoming earnings will be crucial. The stock has been flirting with the $50 mark for months, only to be repeatedly pushed back, highlighting the strong selling pressure at that level. 

Currently, analyst estimates for BAC's Q3 EPS are diverging. Seaport Research Partners recently raised their estimate to $0.96, while Zacks Research lowered theirs to $0.91. This disparity underscores the uncertainty surrounding the bank's near-term performance. Revenue expectations will also play a pivotal role.

Adding another layer to the analysis is the recent performance of the broader banking sector. Investment banking activities have seen a resurgence in Q3, driven by an uptick in mergers, acquisitions, and IPOs. This positive trend is attributed to a more stable U.S. economy, anticipated rate cuts, and a somewhat easing regulatory environment. The question remains: can Bank of America fully capitalize on this industry tailwind?

Bank of America's robust $40 billion stock repurchase program, authorized in July and effective August 1st, signals management's confidence in the company's financial health. The program, replacing a previous one with $9.1 billion remaining, followed the Federal Reserve's assessment that major U.S. banks possess sufficient capital to weather potential economic storms. This buyback program could provide a floor for the stock price and potentially boost market sentiment.

While the consensus appears to be cautiously optimistic, it's worth considering a potentially bearish scenario. The resurgence in investment banking activity, while positive on the surface, may be masking underlying economic vulnerabilities. The easing of regulations and the anticipation of rate cuts could be interpreted as signs of desperation rather than strength. 

Perhaps the market is overly optimistic, and the recent uptick in deals is simply a last hurrah before a more significant economic downturn. If this is the case, Bank of America, with its significant exposure to the broader economy, could be particularly vulnerable, making the $50 resistance an even more formidable barrier. Furthermore, the positive news surrounding the S&P 500 and Nasdaq reaching all-time highs could be a ‘bull trap' before a market correction.

Ultimately, Bank of America's ability to break through the $50 resistance will depend on its Q3 earnings results and the management's outlook for the future. The markets will be closely watching for any signs of weakness or strength that could tip the balance.