Major financial powerhouses Goldman Sachs and Morgan Stanley are set to dominate the upcoming third-quarter earnings season, spearheading a wave of S&P 500 companies reporting this week. Analysts have significantly escalated their profit forecasts for these leading firms in recent months, suggesting considerable potential for further stock appreciation in the year ahead.
Goldman Sachs stands out, exhibiting the strongest earnings momentum within the group. Wall Street analysts have boosted Goldman's consensus EPS estimate by an impressive over 300% in the last three months alone, and by 59% over the past six months. This remarkable surge is partly attributed to the firm's involvement in completing SpaceX's record-breaking IPO in June. Additionally, Goldman recently emerged as the leading bidder for Palmer Square Capital Management, an entity overseeing approximately $37 billion in assets, according to Bloomberg reports from September. Discussions also reportedly took place last month regarding the potential succession of CEO David Solomon, 64, by president John Waldron, 57, as early as next year. Analysts currently anticipate Goldman to report earnings of $13.07 per share for the September quarter, with the average price target on Wall Street implying an 18% upside over the next 12 months. Goldman Sachs is scheduled to release its third-quarter results on Tuesday.
Morgan Stanley has also enjoyed a substantial increase in analysts' profit expectations. Its consensus EPS estimate has soared by 144% over the past three months and 73% in the last six. Analysts project Morgan Stanley to earn $2.94 per share, with the average price target suggesting roughly a 15% upside. Investors will be closely monitoring the strength of merger and acquisition advisory profits, alongside how the late-August backup in bond yields might influence lending, M&A activity, and startup funding. In July, the investment bank reported record revenue and profit for the second quarter, primarily fueled by a 69% surge in equities trading revenue, and its wealth management division also surpassed analyst expectations. Morgan Stanley's earnings report is slated for Wednesday.
The third-quarter earnings season, which commences this week, features several other prominent U.S. financial institutions and banks, including Citigroup, JPMorgan Chase, Bank of America, and Wells Fargo. Wall Street has grown increasingly bullish on the earnings potential of these major players as well.
