Wall Street's third-quarter earnings season kicks off this week, with financial giants like Goldman Sachs and Morgan Stanley at the forefront. A wave of analysts have significantly boosted their profit forecasts for these institutions in recent months, signaling a positive outlook and potential for stock appreciation.
According to FactSet data, a total of 25 S&P 500 companies are slated to report their quarterly results. CNBC Pro, leveraging FactSet data, has identified companies exhibiting accelerating earnings momentum and promising appreciation potential. To qualify, these companies needed to show consensus Earnings Per Share (EPS) estimates that have risen by at least 30% in both the past three and six-month periods, with average price targets suggesting an upside of 15% or more.
Goldman Sachs: Strong Earnings Momentum and Strategic Moves
Goldman Sachs stands out with the strongest earnings momentum among the group. Analysts have raised its consensus EPS estimate by over 300% in the last three months and 59% over the past six months. Key events contributing to this surge include the completion of SpaceX's record-breaking IPO in June and Goldman's emerging role as the leading bidder for Palmer Square Capital Management, an asset manager overseeing approximately $37 billion. Recent reports also suggest internal discussions about potential CEO succession, with President John Waldron being considered as a replacement for CEO David Solomon.
Analysts currently project Goldman Sachs to earn $13.07 per share for the September quarter. The Street's average price target implies an 18% upside potential over the next 12 months. Goldman Sachs is scheduled to release its third-quarter earnings on Tuesday.
Morgan Stanley: Rising Expectations and Key Watchpoints
Morgan Stanley is also experiencing a boost in analyst confidence, with its consensus EPS estimate soaring 144% over the past three months and 73% over the past six. Analysts anticipate Morgan Stanley will report earnings of $2.94 per share, with the average price target suggesting approximately 15% upside.
Investors will be keenly observing the performance of Morgan Stanley's merger and acquisition (M&A) advisory services and the impact of the recent backup in bond yields on lending, M&A activity, and startup funding. In the second quarter, the investment bank delivered record revenue and profit, largely driven by a 69% surge in equities trading revenue. Its wealth management division also surpassed analyst expectations during that period.
Morgan Stanley is scheduled to report its third-quarter results on Wednesday.
Broader Banking Sector Optimism
Beyond Goldman Sachs and Morgan Stanley, many other major U.S. financial institutions, including Citigroup, JPMorgan Chase, Bank of America, and Wells Fargo, are set to announce their earnings. Analysts are increasingly bullish on the earnings potential across the broader banking sector.
