Bank of America: Net Interest Income is Only Half the Story
Bank of America Corp (NYSE:BAC) delivered better-than-expected second-quarter results, posting EPS of $0.46 compared to consensus estimate of $0.43. However, net interest income (NII) fell short of expectations, even in the face of rate hikes in March and June.
Oppenheimer analyst Chris Kotowski points out that NII only tells half the story. The analyst highlights three primary influences which factor into the lack of a rise in NII: “(1) BAC sold its UK card business; (2) trading-related NII, which fluctuates considerably, was down $0.2B this quarter which offset a similar increase in consumer banking; and (3) the decline of LT rates during the quarter slightly pressures NIM.”
Overall, Kotowski do not implicate a slowdown. In fact, the analyst expects “the increase in core consumer NII to remain and grow with further rate increases, while the other two factors will likely fluctuate in both directions but overall likely remain steady.”
As such, Kotowski reiterates an Outperform rating on BAC and raised the target price from $29 to $30, noting, “BAC’s revenue growth story remains intact.” (To watch Kotowski’s track record, click here)
TipRanks analytics indicate BAC as a Strong Buy. Out of 10 analysts polled by TipRanks in the last 3 months, 7 are bullish, while 3 remain neutral. The consensus target price stands at $26.30, revealing a 10% upside from current levels.
CymaBay’s Seladelpar Drug Could Offer Big Advantages
CymaBay Therapeutics Inc (NASDAQ:CBAY) shares rallied nearly 16% yesterday, after the drug maker announced positive interim results from its ongoing low-dose Phase 2 study of seladelpar in patients with primary biliary cholangitis (PBC), a life-threatening and life-limiting chronic cholestatic liver disease.
Analyst Jay Olson of Oppenheimer looked at how the news will affect the stock and even open the door for strategic partnerships in NASH where clinical studies will be larger and longer in duration. The results of the study found that both 5 and 10mg doses and were effective and that the drug is safe for consumption for patients suffering from PBC and NASH. Furthermore, the FDA removed barriers, which could have prevented further clinical development.
Olson noted “The AP reduction for the 10mg dose of seladelpar was still growing at week 12 suggesting a potential for further AP reduction with continued dosing. These AP reductions compare favorably with existing PBC treatments in our view”. The analysts view also falls in line with opinions from the medical field as well. Professor Gideon Hirschfield praised the preliminary findings stating: “We think that seladelpar could offer patients significant advantages over existing treatments.”
Perhaps most significant was the lack of safety concerns associated with the drug. Olson drew attention to the lack of “drug-induced pruritus or increased LDL-cholesterol… transaminases and LDL actually decreased suggesting additional efficacy.” When factored together with the success the 5mg dose (39%) and the 5mg dose (45%) we could see reductions in AP at week 12 from baseline levels. In Olson’s view “These AP reductions compare favorably with existing PBC treatments.”
The analyst maintains an Outperform rating for CBAY with an $8.00 price target, representing a 15% upside from current levels. (To watch Olson’s track record, click here)
TipRanks analytics indicate CBAY as a Strong Buy. Out of 3 analysts polled by TipRanks in the last 3 months, all are bullish. The consensus target price stands at $8.83, revealing a 27% upside from current levels.
Optimism High for TherapeuticsMD’s TX-004HR Drug
It has been an eventful week for TherapeuticsMD Inc (NYSEMKT:TXMD) in regard to advancing approval on its new drug TX-004HR. The company received minutes from an FDA meeting on June 14th and filed additional information to which the FDA is expected to respond in the coming weeks. However, Oppenheimer’s Olson noted a curve ball, which was a bit unpredictable. An independent entity has sent a 93K-patient study abstract to the FDA with new unseen data. While no one knows for sure the content of the data, the analyst “suspects this new data is likely to support the safety of VVA estrogen products.” The analyst opines that this is connected with an NIH-sponsored observational trial “that is likely to report on long-term safety outcomes of VVA estrogen products.”
Olson also perceived this week’s regulatory update as “clear collaboration between TXMD and the FDA to achieve a common goal of delivering the safest and most effective VVA treatment to patients.” The analyst substantiated this claim by citing TXMD effort to “proactively cooperate by voluntarily abandoning the 25 mcg dose and drafting a post-approval safety study protocol.” Olson also pointed to the June update to the NAMS position statement as evidence of “growing support from the medical community”.
The analyst believes that the TX-004HR is on track and that he is “optimistic about TX-001HR based on REPLENISH, which showed positive efficacy results for the 2 higher doses combined with clean safety including no incidence of endometrial hyperplasia or malignancy.”
Although a bit conservative compared to the street, the analyst reiterates an Outperform rating for TXMD with a $10 price target representing a 90% upside from current levels.
TipRanks analytics indicate TXMD as a Strong Buy. Out of 5 analysts polled by TipRanks in the last 3 months, all are bullish. The consensus target price stands at $19.50, revealing a 270% upside from current levels.