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Bloomberg
Morgan Stanley is a clear winner, posting its biggest share rally since February 2017, after reporting third-quarter results earlier, garnering near-universal approval from Wall Street analysts picking through its report. Goldman Sachs Group’s stock is gaining too, but just the most since September 19, while its earnings are getting more of a cold eye.
Morgan Stanley is scoring the biggest gain in the S&P 500 Financials Index, while BlackRock Inc and a host of regional banks, including Comerica Inc, were among the largest decliners. BlackRock’s and Comerica’s third-quarter earnings disappointed, with BlackRock flagging lower fees and investor anxiety, and Comerica’s loans slipping. Here’s what analysts are saying about Goldman and Morgan Stanley:
KBW, BRIAN KLEINHANZL
Goldman’s earnings beat on revenue, but “sustainability is an open question,†Kleinhanzl writes in a note. Goldman “posted solid results this quarter but comments on lower IB pipelines sequentially could limit the upside in shares.â€
Morgan Stanley’s results were strong, Kleinhanzl says, “driven by better revenues in trading and investment banking,†and shares are poised for outperformance today as the stock was a laggard into earnings.
BARCLAYS, JASON GOLDBERG
Goldman’s revenues increased 4 percent year-over-year, but fell 8 percent on a linked quarter basis, Goldberg writes. Investment banking fees for underwriting were better, but advisory worse, while FICC “was light,†and Investing & Lending, Investment Management and equities trading were better than expected. He notes that results also benefited from a lower-than-forecasted tax rate.
BUCKINGHAM, JAMES MITCHELL
Both banks handily beat consensus expectations on strong underwriting results and solid expense discipline, Mitchell writes in a note. He sees Morgan Stanley’s report as likely to be “viewed as higher quality and met with more relief, given broad-based strength across businesses, including better-than-expected sales and trading results.†At the same time, Mitchell said investors are still worried about broader concerns, including the mergers and acquisitions cycle, and doubted third-quarter earnings would offer a “lasting catalyst†for banks.