Following the release of earnings reports from major banks, Equity Research CFRA Research Director Ken Leon joins Market Domination to discuss his outlook for next week's earnings from Goldman Sachs (GS), Bank of America (BAC), and Morgan Stanley (MS).
Leon compares Bank of America to JPMorgan, noting that the focus will be on the consumer again. Regarding Goldman Sachs, Leon believes that CEO David Solomon will appear "much more confident," emphasizing the company's efforts to generate "durable recurring revenue" and seeking a higher valuation for the stock. Leon has a similarly bullish outlook on Morgan Stanley, stating that both Morgan Stanley and Goldman fit into his prediction of "much healthier capital markets" in 2024, which he believes they stand to benefit from.
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This post was written by Angel Smith
Video Transcript
JARED BLIKRE: Got time for one more here. Just wondering what you think about the slate of earnings that we have for Monday for next week focusing on maybe Goldman Sachs. But I'll give you the floor here.
KEN LEON: Yeah. That's great. So we have Goldman, Morgan Stanley and Bank of America. Bank of America, I think situated more like a JP Morgan or Wells. Much interest on the consumer again and commercial lending. But they're an investment bank. Goldman, I think David Solomon is going to be much more confident. He doesn't really have to worry so much about the strategy that didn't work in consumer banking and focus on the great franchises that they have.
He will be talking about and so will Morgan Stanley about having durable recurring revenue, and fee income that leads to confidence on the earnings power of those two companies and trying to get a higher multiple valuation for those stocks. So it's just not one trade, one up or down quarter for trading. That's important. But I think Goldman and Morgan Stanley have the chance if they fit into my scenario that we're going to see much healthier capital markets for the rest of this year, which we will, that will benefit them.
Ultimately, when I look at these, we have a buy on Goldman. We have a buy in Morgan Stanley a hold on Bank of America.
JARED BLIKRE: All right. We'll see how the investment in capital markets plays out, specifically Monday with respect to some of those earnings we've been talking about. Thank you for joining us here, Ken.