Here’s what Wall St. experts are saying about big banks ahead of earnings

Morgan Stanley says April earnings will be about "outlook, not the results"

JPMorgan (JPM), Citigroup (C), and Wells Fargo (WFC) are scheduled to announce quarterly results on April 14. What to watch for: 

OUTLOOK, NOT RESULTS: In a pre-earnings research note, Morgan Stanley argued that April earnings will be about “outlook, not the results.” The firm lowered 2023 and 2024 EPS forecasts a median 4% and 15%, respectively, to reflect accelerating deposit betas driving down net interest margins, tightening lending standards slowing loan growth and boosting NCOs and slowing buybacks. Morgan Stanley lowered its price targets on JPMorgan to $153 from $173, Wells Fargo to $47 from $58. Goldman Sachs (GS) to $329 from $332, and Bank of America (BAC) to $31 from $37. The firm has Overweight ratings on JPMorgan and Wells Fargo, Equal Weight ratings on Bank of America and Goldman Sachs, and an Underweight rating on Citigroup.

TARGET CUTS AHEAD OF EARNINGS: Evercore ISI analyst Glenn Schorr lowered the firm’s price target on JPMorgan to $146 from $157 on Wednesday, while keeping an Outperform rating on the shares. The firm has lowered estimates by an average of 9% across its U.S. brokers, banks and asset managers coverage as it thinks lower investment banking fees, fewer PE-related gains, weaker asset and wealth management flows, a tough backdrop for deposits and lending, normalizing credit costs and less buybacks all worked to offset higher market levels and "hopefully OK trading."

GOLIATH IS WINNING: Last month, Wells Fargo upgraded JPMorgan to Overweight from Equal Weight with a price target of $155, up from $148. The firm says JPMorgan epitomizes its banking theme of "Goliath is Winning." The bank should benefit from both market share gains and its more diversified business "in these less certain times," Wells says. JPMorgan is "battle-tested through downturns," aided by its "fortress balance sheet," contends the firm. Wells now forecasts the bank’s revenues will grow faster than expenses, even with its ongoing elevated investment spend.

POSITIVE CATALYSTS: Raymond James recently upgraded Wells Fargo to Strong Buy from Outperform with a price target of $47, down from $52. The firm sees "several incremental positive catalysts for the bank going forward." As a systemically important financial institution, Wells Fargo will be a major beneficiary of the SVB Financial, Signature Bank fallout, Raymond James tells investors in a research note. With uninsured depositors across the country fleeing to larger and safer institutions, the firm expects incremental growth in Wells’ deposit base. Additionally, it believes Wells offers greater earnings growth potential over the intermediate term given the possibility of the removal of consent orders and the associated regulatory expenses, which amount to billions of dollars every year.

Keywords: earnings watch, earnings, quarterly results, outlook, banks