Goldman Sachs, Bank Of America Q3 Earnings Preview: Will Big Banks Maintain Their Momentum?

Goldman Sachs Group Inc. (NYSE:GS) and Bank of America Corp. (NYSE:BAC) are set to unveil their third-quarter earnings ahead of Tuesday’s market opening.

Last week, several major U.S. banks, including JP Morgan Chase & Co. (NYSE:JPM), Wells Fargo & Co (NYSE:WFC), Citigroup Inc (NYSE:C), and PNC Financial Services Group, Inc. (NYSE:PNC), exceeded earnings per share (EPS) forecasts, suggesting that the elevated interest-rate environment has proven advantageous for the banking sector.

JP Morgan Chase & Co. achieved record net interest income (NII) and raised its guidance while acknowledging that it is experiencing higher-than-normal net interest income and lower credit costs.

On Monday, Charles Schwab Corp. (NYSE:SCHW) also surpassed earnings expectations but fell slightly short of revenue projections.

Anticipating Bank of America and Goldman Sachs’ Earnings Reports

• Wall Street analysts’ consensus estimates indicate that Bank of America is likely to report EPS of $0.83 for the previous quarter, reflecting a 2.5% increase compared to the same period last year. On the revenue front, analysts predict $25.1 billion, a similar 2.5% year-over-year increase.
  
• For Goldman Sachs, Wall Street analysts expect a median EPS of $5.42 for the previous quarter, which represents a 35% decline compared to the same quarter last year. Revenue predictions stand at $11.15 billion, signifying a 7% decrease year-over-year.

Stock Chart Analysis: Has Bank Of America Bottomed Out In October?

Bank of America’s stock has declined by 47% since reaching its peak in February 2022, and it is currently down 19% year-to-date. The stock is trading 25% lower compared to its pre-Covid levels in February 2021.

In early October, Bank of America’s shares hit a three-year low, and the stock price is currently trading 6% and 12% below its 50-day and 200-day moving averages, respectively.

Bank of America has consistently surpassed earnings expectations in 13 of the last 15 quarters, with the exceptions being Q1 2020 and Q2 2022.

The 12-month average price target set by analysts for Bank of America is $33.60, implying a potential 25.5% increase from its current levels. The last time Bank of America reported earnings higher than expected, on July 18, 2023, the stock price increased by 4.4%.

In early October, shares of Bank of America hit the lowest levels in three years, and stock price is currently trading 6% and 12% lower compared to the 50-day and 200-day moving average.

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Stock Chart Analysis: Will Goldman Sachs Hold Above $300?

Goldman Sachs has witnessed a 26% decline since reaching its peak in November 2021 and is currently down 9% year-to-date.

In October, Goldman Sachs’ shares retested the lows seen in 2023, around $303-304, which were previously reached in March of the same year.

The stock is currently trading 4% and 6% below its 50-day and 200-day moving averages, respectively.

Analysts’ 12-month average price target for Goldman Sachs is $379.39, indicating a potential 22% upside from its current levels.

Despite reporting lower-than-expected earnings in Q1, Goldman Sachs saw a 3.1% increase in its share price on July 18.

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