Major U.S. Bank Stocks Begin Recovery as Earnings Reports Loom
U.S. bank stocks are showing signs of a rebound following a sluggish winter period. Next week’s first-quarter earnings reports are set to play a crucial role in assessing how robust this recovery can be. Notably, an analyst recently upgraded Morgan Stanley (MS), highlighting its strong profitability as unparalleled in the sector.
Erika Najarian, an analyst at UBS, raised Morgan Stanley’s rating from neutral to buy, with a new price target of 196, consistent with prior estimates. She believes that the strength of the bank’s advisory services, coupled with the potential for substantial initial public offerings (IPOs) this year and a leading wealth management division, present favorable conditions for the stock.
UBS’s earnings forecast for Morgan Stanley in 2026 is $11.75 per share, slightly above the consensus of $11.40, and for 2027, they project earnings of $12.60 per share compared to the consensus of $12.41. Najarian notes the bank’s proactive approach and sees it as well-positioned to benefit from the ongoing advancements in artificial intelligence in the wealth sector.
Morgan Stanley is scheduled to report its first-quarter earnings before the market opens on Wednesday, with analysts projecting earnings of $3.02 per share, a year-over-year increase of 16.1%. Revenue is expected to rise 11.1% to approximately $19.7 billion, according to data from FactSet.
Additionally, the stock recently surged above its 50-day moving average, benefiting from a broader market rally amid geopolitical developments. Currently, Morgan Stanley shares are poised just 9% away from a key buy point in a cup formation.
Year-to-date, Morgan Stanley’s stock performance has been modest, with the broader group of 23 major banks up only 1%. After peaking in early February, bank stocks fell significantly but appear to be stabilizing now. Morgan Stanley holds a Composite Rating of 85, along with a relatively stable average true range (ATR) of 3.22%, indicating consistent price behavior.
On the same day, Bank of America and PNC Financial Services are also set to release Q1 earnings. Both companies have reclaimed their 50-day moving averages and are forming cup bases as well. Analysts forecast Bank of America will report earnings of $1.01 per share, up 12.2%, while PNC’s earnings are expected to rise by 17.9% to $4.15 per share.
In the days leading up to these earnings, JPMorgan Chase, Citigroup, and Wells Fargo are expected to announce their quarterly results, all of which are nearing their respective bases. Analysts project JPMorgan’s earnings to increase by 11.7% to $5.49 per share, with revenues growing to $49.1 billion. Citigroup’s earnings are anticipated to rise by a remarkable 34.8%, while Wells Fargo’s profits are expected to increase by 15.4%.
Goldman Sachs will also release its Q1 earnings soon, with expectations for a healthy rise in both earnings and revenue. Najarian reassured investors that despite negative press around the banking sector, estimates remain steady. She expressed optimism about the future, pointing to strong activity in direct lending and capital markets.
Overall, while the banking sector has faced challenges, the upcoming earnings reports present potential opportunities for growth, particularly as market conditions evolve.
