Goldman Sachs Is Upgraded at JMP Securities, Morgan Stanley Gets a Downgrade

Goldman Sachs is upgraded by analysts at JMP Securities, who see the bank in the midst of a 'meaningful transformation.'
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Goldman Sachs (GS) - Get Report was upgraded by analysts at JMP Securities, who see the bank in the midst of a "meaningful transformation," but Morgan Stanley was downgraded as growth there won't be enough to "move the needle."

Goldman Sachs was upgraded to market outperform from market perform with a $290 price target; Morgan Stanley was cut to market perform from market outperform.

Both banks will release their quarterly earnings this week - Goldman Sachs reports ahead of the market open on Wednesday and Morgan Stanley will issue earnings Thursday.

“We believe Goldman Sachs is in the early stages of one of the most meaningful transformations within financial services, and we are bullish on its ability to execute from here,” analysts wrote in Monday’s note. “We still believe the market is underappreciating, or even dismissing, the evolution and growth shift occurring at the firm.”

Four growth drivers will be:

  • Innovative growth avenues
  • Increased transparency around growth initiatives
  • Market share growth opportunities in Goldman’s legacy business

Meanwhile, JMP's outlook on Morgan Stanley isn't as rosy as the firm expects the bank to grow in the mid-single digits organically, which isn't enough to “move the needle.”

“Without a meaningful idiosyncratic catalyst, and after shares rallied 29% in 2019, we believe the risk/reward in MS shares is more balanced today at ~9.5x our 2020E EPS,” JMP said. “Morgan Stanley’s transformation over the past decade has been impressive, and we still believe fundamentals are broadly constructive heading into 2020… we expect incremental growth will be respectable but it is also difficult to substantially move the needle.”

Goldman Sachs gained 1.2% Monday to $245.08, while Morgan Stanley was up 0.53% to $52.49. 

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