JMP Says to Steer Clear of Big US Banks; Cuts Estimates on Goldman (GS), Morgan Stanley (MS)
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Price: $158.72 +0.83%
Rating Summary:
7 Buy, 18 Hold, 2 Sell
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Today's Overall Ratings:
Up: 11 | Down: 18 | New: 13
Rating Summary:
7 Buy, 18 Hold, 2 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 11 | Down: 18 | New: 13
Trade GS Now!
Shares of Goldman Sachs (NYSE: GS) and Morgan Stanley (NYSE: MS) are holding up relatively well Tuesday afternoon despite some very concerning comments from JMP Securities' David Trone earlier. While shares of Morgan Stanley are up about 1.3 percent at last check, Goldman shares aren't faring quite as well, up just 0.1 percent.
Trone reduced earnings estimates on both Goldman and Morgan Stanley following last week's Moody's downgrades. He now sees Goldman posting second-quarter earnings of $1.50 per share, down from $1.74 previously, and FY12 earnings of $6.85, down from a prior $7.09 estimate. Trone reduced his GAAP EPS estimates for Morgan Stanley's second quarter and FY12 from $0.93 and $2.54 to $0.73 and $2.34, respectively. Trone had previously estimated for larger DVA liability markdowns.
The analyst believes valuations in the big bank sector will likely move below the lows set in either 2010 or 2011, and sees continued issues reaching into 2013. Trone said he has "low confidence that the EU mess will prove manageable." Within the US, Trone seemed concerned about the sector-wide implications related to the CIO trading loss debacle JPMorgan (NYSE: JPM) has gotten itself into.
JMP's Trone maintains Market Underperform ratings on Goldman and Morgan Stanley. The analyst has a $77 price target on Goldman shares and an $11 target on shares of Morgan Stanley.
The Financial Select Sector SPDR ETF (NYSE: XLF) is up 0.7 percent with about an hour left in Tuesday's trading session.
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Trone reduced earnings estimates on both Goldman and Morgan Stanley following last week's Moody's downgrades. He now sees Goldman posting second-quarter earnings of $1.50 per share, down from $1.74 previously, and FY12 earnings of $6.85, down from a prior $7.09 estimate. Trone reduced his GAAP EPS estimates for Morgan Stanley's second quarter and FY12 from $0.93 and $2.54 to $0.73 and $2.34, respectively. Trone had previously estimated for larger DVA liability markdowns.
The analyst believes valuations in the big bank sector will likely move below the lows set in either 2010 or 2011, and sees continued issues reaching into 2013. Trone said he has "low confidence that the EU mess will prove manageable." Within the US, Trone seemed concerned about the sector-wide implications related to the CIO trading loss debacle JPMorgan (NYSE: JPM) has gotten itself into.
JMP's Trone maintains Market Underperform ratings on Goldman and Morgan Stanley. The analyst has a $77 price target on Goldman shares and an $11 target on shares of Morgan Stanley.
The Financial Select Sector SPDR ETF (NYSE: XLF) is up 0.7 percent with about an hour left in Tuesday's trading session.
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