Earnings Previews: Bank of America, Morgan Stanley, Procter & Gamble, UnitedHealth

Last Friday, investors got their first look at how the country’s biggest banks fared in the fourth quarter of 2021. Judging by their reactions, Wells Fargo deserved a share price boost and JPMorgan deserved to get punished. Citigroup and BlackRock closed lower on Friday, but they avoided the punishment JPMorgan received.

Following Monday’s Dr. Martin Luther King Jr. holiday, Goldman Sachs and Truist reported results before markets opened Tuesday. Truist beat on both the top and bottom lines, while Goldman missed the consensus earnings estimate.

More financial sector results are coming up this Wednesday and the rest of this week, as well as reports from consumer product, industrial, and transportation firms. It is going to be a busy week.

Here are four earnings reports due out before markets open on Wednesday.

Bank of America

Bank of America Corp. (NYSE: BAC) has seen a share price boost of 46% over the past 12 months. Revenue rose by almost 21% over the period and operating income has jumped by nearly a third. Part of that boost in operating income came as a result of reduced costs and, in the second half of the year especially, a significant part came from reserve releases. That is less impressive.

Analysts are bullish on BofA, with 16 of 26 putting a Buy or Strong Buy rating on the shares. Another seven rate the stock at Hold. At a recent price of around $47.90 a share, the implied gain based on a median price target of $51.75 is 8.0%. At the high price target of $64, the implied upside is 33.6%.

Fourth-quarter revenue is forecast at $22.19 billion, which would be down by 2.5% sequentially but by 9.7% higher year over year. Adjusted earnings per share (EPS) are expected to come in at $0.76, a drop of nearly 11% sequentially but up 28.8% year over year. For the full fiscal year, analysts currently forecast EPS of $3.45, up almost 85%, on revenue of $89.42 billion, up about 3.9%.

This stock trades at 13.9 times expected 2021 EPS, 15.2 times estimated 2022 earnings of $3.16 per share and 13.1 times estimated 2023 earnings of $3.67 per share. The stock’s 52-week range is $29.57 to $50.08. BofA pays an annual dividend of $0.84 (yield of 1.75%). Total shareholder return for the past 12 months was 47.9%.

Morgan Stanley

Morgan Stanley (NYSE: MS) is the fourth-largest U.S. bank by market capitalization. The bank’s share price has improved by 34% over the past 12 months, but higher interest rates this year are probably a mixed blessing. Another question mark going forward is trading revenue. What the bank has to say about 2022 probably will be more important than what happened last year.

Sentiment remains bullish on the stock, with 18 of 28 brokerages assigning the shares a Buy or Strong Buy rating. Another nine rate the stock at Hold. At a share price of around $98.90, the upside potential based on a median price target of $115 is 16.3%. At the high target of $140, the upside potential is nearly 42%.

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