Financials are broadly higher today, with Goldman Sachs (GS) up $2.27, or 1.3%, at $175.31, even as analysts continue to lower their estimates for banks.
Pali Capital analyst Douglas Sipkin today lowered his December-quarter estimates for Goldman, Morgan Stanley (MS), Jefferies Group (JEF) based on the slowdown in December quarter. His Goldman EPS estimate goes to $6.50 from $7.74. Nevertheless, Sipkin expects a pick-up in trading this quarter, largely on expectations of a Fed Reserve rate hike in the second half of the year.
For Morgan Stanley, Sipkin’s EPS goes to 26 cents per share form 41 cents. That includes a higher-than-expected allowance for losses from tightening credit spreads. Trading revenue will be down about 30% form the prior quarter, and banking, down 8% to 10%, writes Sipkin. Jefferies’s EPS will be about 31 cents, below Sipkin’s prior 42-cent estimate.
Sipkin likes both Goldman, which he calls the most attractive of the financials, and Morgan, giving them both “Buy” ratings and price targets of $215 and $39, respectively. He’s not comfortable with Jefferies’s valuation of 2.1 times his projected book value for this quarter, and rates the stock “Neutral.”
Morgan Stanley shares today are up 77 cents, 2.5%, at $31.68. Jefferies shares are up 31 cents, or 1.3%, at $24.57.
No comments:
Post a Comment