Investing

Earnings Previews: Citigroup, Goldman Sachs, Morgan Stanley, Wells Fargo

Morgan Stanley

Morgan Stanley (NYSE: MS) has seen a share price improvement of about 6.8% over the past 12 months. Since early February, however, the bank’s stock price has dropped by almost 23%. Like Goldman Sachs, Morgan Stanley’s IPO underwriting business has slowed to a near stop. The bank’s merger and acquisition deal value has dropped by about 30% as well.

Sentiment remains bullish on the stock, with 19 of 29 brokerages assigning a Buy or Strong Buy rating. The rest rate the stock at Hold. At a share price of around $84.00, the upside potential based on a median price target of $109.00 is nearly 30%. At the high target of $125.00, the upside potential is 48.8%.

The consensus estimate for first-quarter revenue is $14.36 billion, down about 1.1% sequentially and about 8.7% year over year. Adjusted EPS are forecast at $1.75, down nearly 19% sequentially and 21.1% year over year. For full fiscal 2022, analysts are currently looking for revenue of $57.50 billion, down 3.8%, and EPS of $7.28, down by 11.5%.

Morgan Stanley stock trades at 11.5 times expected 2022 EPS, 10.2 times estimated 2023 earnings of $8.23, and 9.0 times estimated 2024 earnings of $9.35. The stock’s 52-week range is $76.25 to $109.73, and the bank pays an annual dividend of $2.80 (yield of 3.33%). Total shareholder return over the past year was 6.8%.

Wells Fargo

Wells Fargo & Co. (NYSE: WFC) is the nation’s third-largest bank (measured by market cap), and its share price has risen by about 24% over the past 12 months. Since early February’s 52-week high, the stock has dropped about 16.5%. Wells Fargo is expected by some to see bigger benefits from the rise in interest rates. A recent report from Bloomberg revealed the bank’s high rejection rate of Black applicants for mortgage loans has led to a decision by New York City officials not to open any new depository accounts with the bank while the city investigates the new charges.

Analysts are getting more bullish about Wells Fargo. Of 26 brokerages covering the bank, six have a Hold rating and 20 have a Buy or Strong Buy rating. At a share price of around $49.30, the upside potential based on a median price target of $61.50 is 24.7%. At the high price target of $71.00, the upside potential is about 44%.

Analysts are expecting first-quarter revenue to total $17.82 billion, down about 14.6% sequentially and 1.3% lower year over year. Adjusted EPS are forecast at $0.81, down about 35.2% sequentially and 21.4% year over year. For full fiscal 2022, EPS are currently forecast to slip by 18.5% to $3.97 and revenue is expected to decline by 5.9% to $73.84 billion.

Wells Fargo stock trades at 112.4 times expected 2022 EPS, 9.8 times estimated 2023 earnings of $5.01 and 8.0 times estimated 2024 earnings of $6.13. The stock’s 52-week range is $39.06 to $60.30. Wells Fargo pays an annual dividend of $1.00 (yield of 2.05%), and total shareholder return for the past 12 months is about 23.6%.

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