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Morgan, Goldman Rivalry Heats Up

Stocks in this article: GS MS

But earlier this month, Bove changed his tune, telling Bloomberg he "loves" Morgan Stanley and predicting a big increase in its stock price this year, along with other big banks.

Analysts, including Bove, are still more bullish on Goldman, however. Fifteen Wall Street prognosticators are advising clients to buy Morgan Stanley stock, vs. two with sell ratings, and another 10 telling clients to hold. Nineteen advise clients to buy Goldman, none advise selling, and seven advise holding.

Over the past year, Goldman's stock has outperformed, rising 126%, vs. a 95% increase for Morgan Stanley shares. But as Morgan sentiment has gotten more bullish recently, so has its stock price: Morgan Stanley shares are up 2.6% this year, vs. a 2.1% decline in Goldman Sachs.

When the two firms report fourth-quarter results this week, it won't be surprising if Goldman out-earns Morgan Stanley once again. Wall Street's current consensus view is for Goldman to earn $5.19 per share, far above the 36-cent earnings prediction for Morgan Stanley. But the question isn't really how much the firms earned last quarter, but how much room they have to grow in 2010.

The competition is evident in the battle over their earnings date alone. Although competitors tend to choose different days to report, and vie for the first position if results are astounding, Goldman made a surprising move after Morgan Stanley said it would report on Jan. 21: It chose the same date. Morgan Stanley then countered on Jan. 8, moving its report up a day.

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