Goldman Sachs (GS) is scheduled to report earnings on April 14, while Citi (C) and Bank of America (BAC) are expected to announce quarterly results on April 15. What to watch for:
RATINGS SHAKEUP: On Monday, Morgan Stanley upgraded Bank of America to Overweight from Equal Weight with a price target of $47, down from $56. The firm says recent trade developments drive up recession risk. Morgan Stanley now expects slower GDP growth with rising economic uncertainty to push out the capital markets rebound, incrementally slow loan growth, and drive net charge offs across consumer and commercial loans slightly above its prior estimates. Morgan Stanley moved its large cap bank industry view from Attractive to In-Line. The firm cites valuation for the upgrade of Bank of America. The stock has been the worst performing money center bank year-to-date.
Conversely, Morgan Stanley downgraded Goldman Sachs to Equal Weight from Overweight with a price target of $558, down from $659. Goldman is the most exposed large bap bank to investment banking revenues, which has “the fastest twitch response” to recession risk and deteriorating market conditions, much faster than loan growth at traditional commercial banks, the firm tells investors in a research note.
Morgan Stanley also lowered the firm’s price target on Citi to $90 from $109 but kept an Overweight rating on the shares.
TARGET LOWERED: Citizens JMP lowered the firm’s price target on Goldman Sachs to $600 from $625, while keeping an Outperform rating on the shares. The recovery in Financial Services business momentum, like in Investment Banking, which started in 2024 and had been accelerating, is now in jeopardy, the firm tells investors in a research note. Earnings season matters a lot less than the macro right now, Citizens JMP adds.
Earlier this month, Truist lowered the firm’s price target on Bank of America to $50 from $53 but kept a Buy rating on the shares as part of a broader research note on Financials previewing Q1 results. Truist says that while sell-side EPS estimates are unlikely to incorporate full-fledged recession as their base case, the debate about recession odds should continue to take place in bank stock valuation multiples rather than in estimate revisions. Truist lowered the firm’s price target on Buy-rated Citi to $84 from $85.
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