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What Susquehanna Is Watching At Goldman And Morgan Stanley Pre-Earnings

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In a report published Wednesday, Susquehanna analysts maintained a Neutral rating on both The Goldman Sachs Group, Inc (NYSE: GS) and Morgan Stanley (NYSE: MS), while raising the estimates ahead of the 1Q earnings. The analysts expect FICC to have driven robust results in the quarter.

The first quarter is likely to be a significant improvement over the challenging 4Q14. "The advent of QE, seasonality, and stable U.S. and strong European markets should drive a solid quarter for the investment banks," the analysts said.

For Goldman Sachs, the EPS estimate for 1Q15 has been raised from $3.60 to $4.24. "The revision reflects a stronger quarter for FICC driven by interest rate and currency volatility and more stable credit markets as well as better I&L as the market was once again conducive to harvesting and gains," the analysts commented.

The EPS estimates for 2015 and 2016 have been raised from $16.15 to $16.60 and from $16.36 to $16.73, respectively. These revisions reflect "improved FICC and investment banking."

The 1Q15 revenue estimate is $9.4 billion, with an ROE estimate of 11 percent. The price target has been raised from $190 to $198.

For Morgan Stanley, the EPS estimate for 1Q15 has been raised from $0.71 to $0.78. "The revision reflects improved FICC driven by rate and currency volatility," the analysts wrote.

The EPS estimates for 2015 and 2016 have been raised from $2.59 to $2.76 and from $2.83 to $2.99, respectively. These revisions reflect "better FICC, marginally lower expenses, and higher buybacks."

The 1Q15 revenue estimate is $9.4 billion, with an ROE estimate of 9 percent. The price target has been raised from $33 to $35.

"GS continues to be relatively more attractive to us given its leading banking franchise, AUM business, and more consistent operating results. We also can't ignore book value given the capital requirements in the industry. MS book value declined 3% in 4Q. However, GS is now trading in-line with MS on tangible book despite reporting ROE consistently well in excess of MS," the report added.

Latest Ratings for GS

DateFirmActionFromTo
Feb 2017BerenbergDowngradesHoldSell
Feb 2017Compass PointInitiates Coverage OnNeutral
Jan 2017CitigroupDowngradesNeutralSell

View More Analyst Ratings for GS
View the Latest Analyst Ratings

Posted-In: SusquehannaAnalyst Color Price Target Reiteration Analyst Ratings

 

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