Bank of America shares hit more than 3-year high

Bank of America shares kicked off 2014 with a strong start, hitting a 3 1/2-year high Thursday after Citigroup analysts increased their rating on the stock.

Shares of the Charlotte-based bank rose as high as $16.16 in intraday trading after the report gave a “buy” recommendation to the stock, up from “neutral.” The analysts cited their expectation that Bank of America will see continued expense reductions through the bank's sweeping cost-cutting initiative known as Project New BAC and through lower legal costs.

The bank's shares closed at $16.10 Thursday, the highest closing price since $16.18 on May 27, 2010. Thursday's intraday high topped the previous intraday high of $16.10 on June 21, 2010.

Bank of America's price is above the $15.06 at which it closed Dec. 31, 2009, the day before CEO Brian Moynihan officially started as CEO. Last year, the bank's shares hit 52-week highs more than two dozen times, according to Bloomberg data.

But Bank of America's share price remains below its peak hit in 2006, when it topped $50. Last year, Bank of America's low share price cost the bank its placement on the Dow Jones Industrial Average 30-stock index. The price also still lags that of its big-bank peers.

Analysts say the rising price of the bank's stock reflects investor confidence that Moynihan, who is in his fifth year as CEO, is delivering on cost-cutting promises and cleaning up the bank’s legal issues. The bank has spent billions to settle legal disputes stemming from the financial crisis.

The Citigroup report said Bank of America continues to face lawsuit risks because of its 2008 purchase of Countrywide Financial Corp., which originated mortgages that soured and cost investors billions of dollars. But the bank has also been able to lower its costs related to servicing Countrywide mortgages, the analysts said.

"Bank of America has several components to improved long-term earnings potential," the report said.

The Citigroup analysts also said Thursday said they predict the stock will hit $19 in 12 months.

Raymond James analysts said Thursday in a separate report that they expect the stock to hit $17 by that time.