Goldman, Morgan Stanley Estimates Cut
NEW YORK (
) --
Goldman Sachs
(GS) - Get Report
and
Morgan Stanley
(MS) - Get Report
earnings are likely to be hit by compensation issues and weak revenues in interest rate and credit products trading, according to a report published Wednesday by Nomura Securities analyst Glenn Schorr.
"While there has been a pickup in rate volatility, we think the sharp rate moves in the U.S. have likely caused investors to pull back on activity," Schorr writes, noting increased competition may also be a negative.
Schorr also cited "limited comp flexibility," as a negative factor, presumably because it means executives unhappy with diminished pay packages might leave their investment bank employers to work at a hedge fund or private equity firm that has more flexibility.
However, Schorr did not spell this out in the report, and he had no immediate response to an emailed question on this topic.
Schorr retained his official sector view as "bullish," according to the report, but cut his fourth quarter estimate on Goldman to $3.75 from $4.25 and dropped his Morgan Stanley estimate to $0.30 from $0.40.
He left his estimates unchanged on more broadly diversified banks
Citigroup
(C) - Get Report
Bank of America
(BAC) - Get Report
and
JPMorgan Chase
(JPM) - Get Report
.
--
Written by Dan Freed in New York
.
Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.