BofA still a Buy at Citi after marginal stress test result

|About: Bank of America Corporation (BAC)|By:, SA News Editor

Capital return estimates for Bank of America (BAC -0.3%) look a "tad" too high, says Citi's Keith Horowitz, following BofA's getting just a passing grade from the Fed's stress test - its Tier 1 common equity ratio of 5.9% (corrected from the original 6%) under the Fed's adverse economic scenario was the lowest among the 29 of 30 banks which passed.

Horowitz previously estimated BofA would go for a $5B buyback and a $0.03 boost to its dividend (currently just $0.01), but he's thinking a slightly dialed-back repurchase plan may be in order.

Investors will find out after the bell on Wednesday just how close the bank has decided to cut it. Nevertheless, Horowitz would buy any dip should the capital return announcement prove disappointing.