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

Goldman Sachs (GS) is scheduled to announce quarterly results on April 15, while Morgan Stanley (MS) and Bank of America (BAC) are expected to report earnings the following day. What to watch for:

MOVING TO THE SIDELINES: Earlier this month, UBS downgraded Bank of America to Neutral from Buy with a price target of $40, up from $39. The firm believes the shares are trading at fair value and sees a “rate trap” ahead. Share upside in Bank of America is limited over the next 12 months, says UBS, after adjusting its estimates upward to reflect three interest rate cuts in 2024 and four cuts in 2025.

TARGET RAISE AHEAD OF EARNINGS: On Tuesday, JMP Securities raised the firm’s price target on Goldman Sachs to $460 from $440, while keeping an Outperform rating on the shares. Momentum is still positive for the firm’s Capital Markets & FinTech coverage, but JMP Securities sees less room for error after its revaluation higher. The firm continues to favor Goldman Sachs within the Large Cap Investment Banks.

Earlier this month, Seaport Research also upped its price target on Goldman Sachs to $445 from $419, maintaining a Buy rating on the shares as part of a Q1 earnings preview for the diversified financials group. While Q1 was negatively impacted by additional FDIC special assessment charges and higher reserve builds in cards, improving trends across investment banking, asset management, deposits, and the forward curve should drive earnings increases in 2025, the firm tells investors in a research note. Seaport continues to prefer the banks over capital markets names given lower valuation multiples relative to historical averages and lower expectations embedded in the banks’ forward outlook.

HSBC also raised the firm’s price target on Goldman Sachs to $460 from $432, keeping a Buy rating on the shares. After underperforming year-to-date, HSBC is incrementally positive on super regional banks. Citi (C) remains the firm’s preferred choice among banks, however. HSBC continues to expect the banks to show improved net interest income in the second half of 2024, generate operating leverage in 2025, and increase share buybacks in 2025 and beyond.

Meanwhile, Jefferies raised the firm’s price target on Bank of America to $39 from $36, but kept a Hold rating on the shares. In a Q1 preview for the U.S. banks group, the firm made “modest” estimate revisions, based mostly on a move to expecting six Fed cuts from eight through 2025, softer loan growth, and better capital markets fees. Jefferies now forecasts three Fed cuts of 25 basis points each in 2024 and three cuts in 2025.

WHAT’S NOTABLE: Multiple federal regulators – including the Securities and Exchange Commission, the Office of the Comptroller of the Currency and other Treasury Department offices – are involved in probing Morgan Stanley over how it vets clients who are at risk of laundering money through the bank’s wealth-management division, people familiar with the matter told The Wall Street Journal‘s AnnaMaria Andriotis. These regulatory inquiries are in addition to the Federal Reserve, which has told the bank that supervisory action is under consideration and whose similar probe The Wall Street Journal reported in November, the report stated.