UBS on U.S. Financial Sector: Setting Up For Q1 Earnings - Environment Improving, but Group Likely to Remain Volatile

April 2, 2012 1:24 PM EDT
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Price: $42.59 +0.33%

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UBS on U.S. Financial Sector: Setting Up For Q1 Earnings

UBS analyst, Brennan Hawken, said, "We are adjusting our 1Q, 2012 and 2013 estimates primarily due to an improved outlook for capital markets revenue, reduced credit cost expectations, and adjustments to share repurchase plans. For Morgan Stanley (NYSE: MS) and Bank of America (NYSE: BofA) we are lowering our 2012 estimates modestly due to soft equities revenue and revised operating expense forecasts."

"Goldman (NYSE: GS) appears to be in the best position, with expenses from deferred compensation only representing 6% of its 2012E compensation expense. In contrast, JPMorgan (NYSE: JPM) and Morgan Stanley appear to have utilized deferred comp to a greater degree, and we estimate that 2012 estimated amortization of deferred compensation could be nearly 20% of their 2012E IB compensation expense."

Hawken raises JPM's price target from $44 to $54, MS's from $19 to $21, Goldman from $140 to $150, Citi from $43 to $45, and BofA from $8 to $10.

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