Nomura Securities on Global Capital Markets/Brokers & Asset Managers: Cutting Estimates to Reflect a Slower Recovery
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Rating Summary:
24 Buy, 13 Hold, 2 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 15 | Down: 11 | New: 13
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Nomura Securities on Global Capital Markets/Brokers & Asset Managers: Cutting Estimates to Reflect a Slower Recovery by Glenn Schorr
Nomura's Schorr said, "While trading volumes are higher in 3Q11 vs. 2Q11, the bulk of it has been in low-margin trades, and wider credit spreads and lower equity markets will likely lead to some mark-to-market pain for the brokers and universal banks. In addition, lower asset levels and outflows from equity mutual funds will weigh on the asset managers and trust banks. Given the difficult backdrop and likelihood of prolonged macro headwinds (sluggish GDP growth, EU flare-ups, elevated unemployment, low interest rates until 2013, and elevated litigation costs), we have reduced estimates across the board for the remainder of 2011 and also reset expectations for 2012. While September hopefully shakes out better than August, it is a short month given the Labor Day holiday in the U.S., and we are not overly optimistic given the ongoing macro concerns. We would expect consensus estimates to trend down as we head closer to 3Q11 reporting in mid October."
Brokers & Universal Banks – Tough trends (reducing Q3, FY2012-13 estimates)..."In the U.S., we prefer Citi (NYSE: C), JPMorgan (NYSE: JPM) and Goldman (NYSE: GS) and in Europe we prefer UBS (NYSE: UBS)."
Asset Managers – Still Our Favorite Sector..."we continue to prefer the asset managers over the other subgroups, as we think the stocks (asset managers declined 10% on average in August) have declined more than asset levels. Franklin (NYSE: BEN), Invesco (NYSE: IVZ) and BlackRock (NYSE: BLK) (all rated Buy) remain our top picks, while in Europe Baer looks defensive."
Trust Banks – Some headwinds plague the sector..."We have reduced our 3Q11 and out-year estimates for Bank of NY (NYSE: BK), State Street (NYSE: STT) and Northern Trust (Nasdaq: NTRS) based on updated NIM, FX, and AUM/AUC growth assumptions. We remain Neutral on the group, but STT (rated Neutral) remains our top pick."
Nomura's Schorr said, "While trading volumes are higher in 3Q11 vs. 2Q11, the bulk of it has been in low-margin trades, and wider credit spreads and lower equity markets will likely lead to some mark-to-market pain for the brokers and universal banks. In addition, lower asset levels and outflows from equity mutual funds will weigh on the asset managers and trust banks. Given the difficult backdrop and likelihood of prolonged macro headwinds (sluggish GDP growth, EU flare-ups, elevated unemployment, low interest rates until 2013, and elevated litigation costs), we have reduced estimates across the board for the remainder of 2011 and also reset expectations for 2012. While September hopefully shakes out better than August, it is a short month given the Labor Day holiday in the U.S., and we are not overly optimistic given the ongoing macro concerns. We would expect consensus estimates to trend down as we head closer to 3Q11 reporting in mid October."
Brokers & Universal Banks – Tough trends (reducing Q3, FY2012-13 estimates)..."In the U.S., we prefer Citi (NYSE: C), JPMorgan (NYSE: JPM) and Goldman (NYSE: GS) and in Europe we prefer UBS (NYSE: UBS)."
Asset Managers – Still Our Favorite Sector..."we continue to prefer the asset managers over the other subgroups, as we think the stocks (asset managers declined 10% on average in August) have declined more than asset levels. Franklin (NYSE: BEN), Invesco (NYSE: IVZ) and BlackRock (NYSE: BLK) (all rated Buy) remain our top picks, while in Europe Baer looks defensive."
Trust Banks – Some headwinds plague the sector..."We have reduced our 3Q11 and out-year estimates for Bank of NY (NYSE: BK), State Street (NYSE: STT) and Northern Trust (Nasdaq: NTRS) based on updated NIM, FX, and AUM/AUC growth assumptions. We remain Neutral on the group, but STT (rated Neutral) remains our top pick."
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