Whitney Cuts Goldman, Morgan Estimates - TheStreet



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Goldman Sachs

(GS) - Get Report


Morgan Stanley


will be in focus in Thursday's session after influential banking analyst Meredith Whitney lowered her earnings estimates on both firms.

Whitney took down her view of Goldman's profit prospects for the current fourth-quarter period, fiscal 2010, and fiscal 2011. She left intact her outlook for a profit of 52 cents a share from Morgan Stanley in the fourth quarter, but lowered estimates for the next two years.

In general, Whitney was much more bullish on Goldman than the rest of Wall Street analysts so the cuts bring her estimates down closer to what the consensus views already were. In fact, she's still above consensus through 2010. On Morgan Stanley, she was already well below consensus views, so the cuts only widened the gap.

Shares of both companies were off in pre-market action with Goldman down 1.8% to $162.02, and Morgan Stanley falling 1.5% to $29.90.

For Goldman, Whitney now sees earnings of $6 a share for the fourth quarter, down from a prior estimate of $6.38 a share. In fiscal 2010, she is forecasting a profit of $19.65 a share, down 9.6% from her prior estimate of $21.73 a share; and for fiscal 2011, the view is now for earnings of $20.60 a share, down 14.3% from a prior estimate of $24.04.

The current consensus estimates are for Goldman to report earnings of $5.59 a share in the fourth quarter of fiscal 2009, $18.78 a share for fiscal 2010, and $20.94 a share in fiscal 2011, according to

Thomson Reuters


Whitney's cuts on Morgan Stanley weren't quite as dramatic in the near term. She lowered her estimate of fiscal 2010 down 3 cents to $2.60 a share, but dimmed her view of fiscal 2011 by a wider margin, forecasting a profit of $2.75, a level that's 16.2% below her prior estimate of $3.28 a share.

Wall Street's current average views are for Morgan Stanley to report earnings of $3.28 a share in fiscal 2010 and $3.71 a share in fiscal 2011.

Whitney has neutral ratings on both stocks.

Written by Michael Baron in New York.