Bank of America Corp (BAC)

[Seminole Red]

Robert W. Baird analyst David George downgraded Bank of America (BAC) to Neutral from Buy, urging investors not to plow more money into the stock after its 80% rise this year.

George says Bank of America has risen on its improving capital position, but for the stock to rise more the company will have to show that it can grow earnings.

“With the stock flirting with $10, we now think the focus will return to core earnings power at BAC,” George wrote. “Without the benefit of much higher rates, we have a hard time seeing meaningful upside to intermediate-term EPS potential.”

Of course, this is an argument that analysts have made before, when the stock was significantly lower. Certainly, the stock has risen largely on the strength of the company’s improving balance sheet. But analysts who have called a ceiling on bank of America’s move this year have so far been proven wrong.

“Following BAC’s 4Q11 capital actions, passing the stress test has become investors’ expectation and is reflected in its share price, limiting near-term upside,” wrote Goldman Sachs analyst Richard Ramsden in late January, when the stock was trading around $7 per share.