Goldman Sachs, Bank Of America Q3 Earnings Preview: Will Big Banks Maintain Their Momentum?

Goldman Sachs Group Inc. GS and Bank of America Corp. BAC are set to unveil their third-quarter earnings ahead of Tuesday’s market opening.

Last week, several major U.S. banks, including JP Morgan Chase & Co. JPM, Wells Fargo & Co WFC, Citigroup Inc C, and PNC Financial Services Group, Inc. PNC, exceeded earnings per share (EPS) forecasts, suggesting that the elevated interest-rate environment has proven advantageous for the banking sector.

JP Morgan Chase & Co. achieved record net interest income (NII) and raised its guidance while acknowledging that it is experiencing higher-than-normal net interest income and lower credit costs.

On Monday, Charles Schwab Corp. SCHW also surpassed earnings expectations but fell slightly short of revenue projections.

Anticipating Bank of America and Goldman Sachs’ Earnings Reports

• Wall Street analysts’ consensus estimates indicate that Bank of America is likely to report EPS of $0.83 for the previous quarter, reflecting a 2.5% increase compared to the same period last year. On the revenue front, analysts predict $25.1 billion, a similar 2.5% year-over-year increase.
  
• For Goldman Sachs, Wall Street analysts expect a median EPS of $5.42 for the previous quarter, which represents a 35% decline compared to the same quarter last year. Revenue predictions stand at $11.15 billion, signifying a 7% decrease year-over-year.

Stock Chart Analysis: Has Bank Of America Bottomed Out In October?

Bank of America’s stock has declined by 47% since reaching its peak in February 2022, and it is currently down 19% year-to-date. The stock is trading 25% lower compared to its pre-Covid levels in February 2021.

In early October, Bank of America’s shares hit a three-year low, and the stock price is currently trading 6% and 12% below its 50-day and 200-day moving averages, respectively.

Bank of America has consistently surpassed earnings expectations in 13 of the last 15 quarters, with the exceptions being Q1 2020 and Q2 2022.

The 12-month average price target set by analysts for Bank of America is $33.60, implying a potential 25.5% increase from its current levels. The last time Bank of America reported earnings higher than expected, on July 18, 2023, the stock price increased by 4.4%.

In early October, shares of Bank of America hit the lowest levels in three years, and stock price is currently trading 6% and 12% lower compared to the 50-day and 200-day moving average.

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Stock Chart Analysis: Will Goldman Sachs Hold Above $300?

Goldman Sachs has witnessed a 26% decline since reaching its peak in November 2021 and is currently down 9% year-to-date.

In October, Goldman Sachs’ shares retested the lows seen in 2023, around $303-304, which were previously reached in March of the same year.

The stock is currently trading 4% and 6% below its 50-day and 200-day moving averages, respectively.

Analysts’ 12-month average price target for Goldman Sachs is $379.39, indicating a potential 22% upside from its current levels.

Despite reporting lower-than-expected earnings in Q1, Goldman Sachs saw a 3.1% increase in its share price on July 18.

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