What To Expect From Goldman Sachs, Morgan Stanley Earnings

In a report issued Wednesday, Susquehanna analysts Doug Sipkin and Justin LaSalle-Tarantin preview Morgan Stanley (NYSE: MS) and Goldman Sachs Group Inc (NYSE: GS)’s second quarter earnings, which will be reported over the next couple of weeks.

Goldman Sachs

Regarding Goldman Sachs, the analysts see late-June uncertainty weighing on an otherwise “reasonable quarter.” Seeking to reflect “weaker fixed income trading driven by Greek uncertainty in the second half of June,” they trimmed their second quarter earnings estimate to $3.76 per share, from $4.01 per share. The estimate still stands above the Street’s consensus of $3.73 per share.

Susquehanna expects other metrics to be “reasonably solid,” driven by robust secondary equity revenues and “overall healthy trends in investment banking.” Given this situation, they are modeling net revenues of $8.7 billion for the quarter, in line with the Street’s $8.742 billion consensus. ROE is expected to come in at 9.0 percent.

For the full year, earnings are projected at $19.68 per share. For 2016, EPS are expected to come in at $19.08 on the back of a strong M&A pipeline

The firm maintains a Neutral rating and $221 price target.

Morgan Stanley

The analysts also give Morgan Stanley’s stock a Neutral rating, accompanied by a $37 price target. For the second quarter, their expectations are now marginally higher as equity trading and underwriting remain strong.

The firm models earnings of $0.75 per share, versus the Street’s $0.74 per share consensus, on revenue of $9.2 billion – versus consensus of $8.984 billion.

“Overall trading revenues should be up nicely from last year driven by an easy comparable in fixed income as well as strong secondary equity activity driven by international markets,” Susquehanna analysts explain. “Global wealth should be up marginally driven by net interest income.” The experts model ROE of 8.8 percent for the quarter.

For the full year, earnings are expected at $3.25 per share; for 2016, the figure descends to $3.05 per share.