03:49 PM EDT, 04/04/2024 (MT Newswires) -- Bank of America ( BAC ) could have limited upside given a combination of macroeconomic factors, UBS Securities said in a note emailed Thursday.

UBS considers the bank's stock to be at fair value following adjustments to account for three Federal Reserve rate cuts in 2024 and four cuts in 2025. The company has a positive momentum going with strong deposit growth, increase in investment banking and markets activity, and potential buybacks, especially in the second half.

With Bank of America's ( BAC ) stock in the high $30s, trading at 12x its estimated 2024 EPS and 11.5x its estimated 2025 EPS, and $4 EPS unlikely until 2026, assuming there's no recession, "this is now fairly reflected in market multiples," UBS said.

However, the conundrum is that if the Fed cuts rates, the bank will have to lower EPS estimates, and if the Fed keeps rates high, Bank of America ( BAC ) could make more money, but renewed concerns about the economy and its portfolio might negatively impact market multiples.

UBS downgraded Bank of America ( BAC ) to neutral from buy, but adjusted its price target to $40 from $39.

Price: 37.01, Change: -0.43, Percent Change: -1.15