Zacks Touts BAC P/TB Discount, But DeepValue's Analysis Urges Caution

What happened

Zacks Investment Research published an article on February 10, 2026, highlighting that Bank of America's stock trades at a price-to-tangible book ratio of 2.04X, below the industry average of 3.42X, suggesting a valuation discount. However, DeepValue's latest master report, based on recent 10-Q filings and market analysis, rates BAC as 'WAIT' with a conviction of 3.5, arguing that the current $52.07 price already embeds optimistic assumptions for mid-single-digit NII growth, stable credit, and continued buybacks. The report notes that BAC trades at 12.52x trailing P/E and 1.26x P/B, with no deep value margin of safety, as base case intrinsic value clusters around $55, only modestly above the current price. Critical risks include NII growth potentially undershooting the 5-7% 2026 guidance, credit losses rising above the 50-60 bps normalized range, and capital return constraints from regulatory changes, which could drive the stock down to $45 in a bear scenario. Thus, while the article points to a superficial relative discount, the deeper analysis indicates that investors should wait for a pullback toward the mid-$40s or clear evidence that operational targets are being exceeded.

Implication

The Zacks article's reliance on P/TB ratio overlooks BAC's specific earnings quality, crowded sentiment, and embedded risks highlighted in DeepValue's report. Current valuation assumes successful delivery of aggressive NII guidance and benign credit, leaving little room for error if macro or operational factors disappoint. With bear case implied value at $45, downside risk is material, especially given rising exposures in cyclical sectors and potential NII sensitivity to rate cuts. Key near-term catalysts include Q1-Q2 2026 NII performance versus the 5-7% target and net charge-off trends, which will validate or undermine the investment thesis. Therefore, disciplined investors should avoid chasing the superficial discount and instead wait for either a lower entry price near $46 or confirmation that BAC is exceeding its 2026 guidance.

Thesis delta

The Zacks article does not alter the DeepValue thesis; it reinforces that superficial valuation metrics can be misleading without considering operational execution and risk factors. Investors should remain focused on BAC's ability to deliver on NII growth and credit stability rather than relative multiples, maintaining the 'WAIT' rating until clearer signals emerge.