11:01 AM EST, 11/07/2025 (MT Newswires) -- Bank of America ( BAC ) is poised for a new period of sustained positive operating leverage, Morgan Stanley said in a Thursday note, as it moved the bank's stock to its "Top Pick" list.

The bank has outlined a clear plan to achieve a return on tangible common equity of 16% to 18%, driven by revenue growth and improved expense management that would bring the expense ratio to between 55% and 59%, Morgan Stanley analysts said.

The bank's held-to-maturity loan portfolio is rolling off into higher-yielding loans and securities, and its net interest income should shift from being a headwind to a tailwind, according to the note.

The analysts model Bank of America ( BAC ) as attaining the return on tangible common equity target range in 2026 and exceeding the target in 2027 and 2028 at 19% and 21%, respectively. Further, the new target is not a ceiling, with the bank confident in hitting targets even if its segment-level goals are not hit simultaneously, the analysts said.

Morgan Stanley's rating on the bank's stock is overweight with a price target of $70.

Price: 53.20, Change: -0.09, Percent Change: -0.17