How to Trade Bank of America After Q3 Earnings Beat

October 19, 2022 11:44

Earnings season is upon us once again and, kicking off the week on Monday, was Bank of America with their third quarter results.

Despite closing last week down 29% for the year, the Bank of America share price soared more than 6% in the first session of the week, as Q3 earnings soundly beat expectations.

Learn how to trade Bank of America shares below!

Stock: Bank of America Corp.
Symbol for Invest.MT5 Account: BAC
Date of Idea: 18 Oct 2022
Time Line: 6 - 12 months
Entry Level: $36.00
Target Level: $41.00
Position Size for Invest.MT5 Account: Max 5%
Risk: High
  • The Invest.MT5 account allows you to buy stocks and shares from 15 of the largest stock exchanges in the world.

All trading is high risk and you can lose more than you risk on a trade. Therefore, you should never invest more than you can afford. Start small to understand your own risk tolerance levels or practise on a demo account first to build up your knowledge before investing in the live markets.

Why Buy Bank of America Stock?

The current economic climate provides a slight conundrum for those considering investing in bank stocks, such as Bank of America.

Many economies are seemingly poised on the brink of recession and the US – which has already recorded two consecutive quarters of negative growth – is no different. Recessions usually hit banking stocks hard, as loan defaults tend to increase.

However, the silver lining for banks is that, for the first time in over a decade, interest rates are rising, and rising quickly. Naturally, higher interest rates are good news for savers, who earn more interest on their savings accounts, but they’re also good news for banks.

Since the Great Recession of 2008, banks have been forced to operate at historically low interest rates. The recent rate hikes not only makes saving more appealing to consumers, thereby increasing bank deposits, but also allows banks to generate more income from loan repayments.

This was on clear display in Bank of America’s Q3 results on Monday. The bank reported Earnings per Share (EPS) of $0.81 on revenue of $24.50 billion, beating the expected figures of $0.78 and $23.56 billion respectively. Although, it should be noted that, whilst beating expectations, EPS actually fell 4.7% year on year.

Whilst investment banking fees slumped 46% year on year, reflective of industry-wide struggles, and overall noninterest income fell 8%, Net Interest Income (NII) soared more than 24% to $13.8 billion thanks to higher rates. This increase not only helped Bank of America beat market expectations, but also easily beat their own NII guidance for the quarter.

With interest rates forecast to rise even further, it would not be surprising to see NII also continue to rise for Bank of America in the current quarter. But, as we have already highlighted above, the banking industry faces potentially challenging times ahead. Bank of America, in particular, certainly seems to be preparing themselves for stormy conditions, boosting their credit loss provisions by $375 million, an increase of 72%, from the previous quarter.

Bank of America Stock Forecast - What Do the Analysts Say? 

According to analysts polled by TipRanks for a Bank of America stock forecast in the past 3 months, there are currently 10 buy, 5 holds and 0 sell ratings on the stock. The highest price level for a Bank of America stock forecast is $51.00 with the lowest price target at $28.00. 

The average price target for a Bank of America stock forecast is $41.03 - which represents more than 20% upside from current levels, at the time of writing.   

Source: TipRanks – 18 October 2022 

An Example Trading Idea for Bank of America Shares

An example trading idea for the Bank of America share price could be as follows:  

  • Buy the stock at $36 to allow for current market volatility. 
  • Target just below the average analyst price target at $41. 
  • Keep your risk small at a maximum of 5% of your total account.   
  • Timeline = 6 - 12 months
  • If you buy 25 Bank of America shares:  
    • If target is reached = $125 potential profit ($41 - $36 *25 shares).

It’s important to remember that the share price is unlikely to go up in a straight line and it may even go down before it rises, if it rises at all. This is especially true currently, given recent high levels of volatility in the global stock markets.

Therefore, it is crucial to exercise good risk management, which is one of the most important aspects of successful trading. You should always know how much you could potentially lose on a trade and the precise risks involved.  

Another factor to consider is the commission, which can eat into your profits. With the Admirals Invest.MT5 account you can buy US stocks from $0.02 per share; however, there is a minimum transaction fee of $1. So, the example trading idea above would have resulted in an overall commission of just $1! 

How to Buy Bank of America Shares in 4 Steps

With Admirals, you can buy shares in Bank of America and over 4,300 other listed companies! In order to buy Bank of America shares, follow these steps:

  • Open an Invest.MT5 account to access the Trader’s Room
  • Click Invest next to your account in order to open the MetaTrader WebTrader   
  • Search for Bank of America shares at the bottom of the Market Watch window and drag the symbol onto the chart
  • Click New Order at the top of the screen and enter the number of Bank of America shares you want to buy
 Depicted: Admirals MetaTrader WebTrader – Bank of America Daily Chart – New Order. Date Range: 22 February 2022 – 17 October 2022. Date Captured: 17 October 2022. Past performance is not a reliable indicator of future results.

Click on the banner below to buy Bank of America shares today! ▼▼▼ 

Do You See the Bank of America Stock Price Moving Differently?   

Remember that all analytics and trading ideas are based on the personal view and experience of the author.  

If you believe there is a higher chance Bank of America’s share price will move lower, then you could choose to go short using CFDs (Contracts for Difference).

The Trade.MT5 and Trade.MT4 accounts from Admirals both allow you to speculate on the price direction of a wide variety of stocks using CFDs.  

This means you can trade long and short to potentially profit from both rising and falling stock prices. Learn more about CFDs in this 'How to Trade CFDs' article. 


The given data provides additional information regarding all analysis, estimates, prognosis, forecasts, market reviews, weekly outlooks or other similar assessments or information (hereinafter “Analysis”) published on the websites of Admirals investment firms operating under the Admirals trademark (hereinafter “Admirals”) Before making any investment decisions please pay close attention to the following:  

  • This is a marketing communication. The content is published for informative purposes only and is in no way to be construed as investment advice or recommendation. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.
  • Any investment decision is made by each client alone whereas Admirals shall not be responsible for any loss or damage arising from any such decision, whether or not based on the content.
  • With view to protecting the interests of our clients and the objectivity of the Analysis, Admirals has established relevant internal procedures for prevention and management of conflicts of interest.
  • The Analysis is prepared by an independent analyst Roberto Rivero, Freelance Contributor (hereinafter "Author") based on personal estimations.
  • Whilst every reasonable effort is taken to ensure that all sources of the content are reliable and that all information is presented, as much as possible, in an understandable, timely, precise and complete manner, Admirals does not guarantee the accuracy or completeness of any information contained within the Analysis.
  • Any kind of past or modelled performance of financial instruments indicated within the content should not be construed as an express or implied promise, guarantee or implication by Admirals for any future performance. The value of the financial instrument may both increase and decrease and the preservation of the asset value is not guaranteed.
  • Leveraged products (including contracts for difference) are speculative in nature and may result in losses or profit. Before you start trading, please ensure that you fully understand the risks involved.
Roberto Rivero
Roberto Rivero Financial Writer, Admirals, London

Roberto spent 11 years designing trading and decision-making systems for traders and fund managers and a further 13 years at S&P, working with professional investors. He has a BSc in Economics and an MBA and has been an active investor since the mid-1990s