Seeking Alpha

Sanford's Hintz cuts Goldman and Morgan Stanley estimates

  • Calling the trading decline facing the big banks "a full-scale rout," Sanford's Brad Hintz cuts his Goldman Sachs (GS -1.3%) Q3 EPS estimate 15% to $2.62, and Morgan Stanley's (MS -0.4%) 20% to $0.41. Q3 is typically soft, he notes, but this year is something more and fixed-income trading could decline 20-25%.
  • Analysts are busy cutting estimates after several management warnings and the weak results from already-reported Jefferies.
  • Earlier: Guggenheim's Marty Mosby downgrades Goldman and BofA for similar reasons (tossing in mortgage banking softness as well).
  • A few more cuts and the banks can report a big Q3 whiff next month and still be able to trade higher.
Comments (10)
  • "A few more cuts and the banks can report a big Q3 whiff next month and still be able to trade higher".
    27 Sep 2013, 01:38 PM Reply Like
  • Imagine how the bank stocks would soar if they cut estimates to $0.01! Actual earnings don't matter, just beats.
    27 Sep 2013, 01:48 PM Reply Like
  • yeap. you can bea't that business model
    27 Sep 2013, 01:50 PM Reply Like
  • Does any of this look like a "rout?"

     

    Last four quarters eps for following:

     

    BAC - $0.00 $0.03 $0.10 $0.32
    JPM - $1.40 $1.39 $1.50 $1.60
    C - $1.06 $0.69 $1.23 $1.34
    WFC - $0.88 $0.92 $0.92 $0.98

     

    Need to differentiate between commercial and investment banks.
    27 Sep 2013, 02:46 PM Reply Like
  • yep. big deals are being done but trading volume has been abysmal going on 5 years now. Hedge funds are by far the worst performing asset class 5 years in a row as well (plain old index funds have incinerated them) and now treasuries are rallying again. "Did i miss the battle Father?" ... "no, son. you missed the war" comes to mind. the irony that banking profits still look manageable here (why else try and fine JP Morgan 20 billion for something Countrywide did?) says to me slow and steady still works. obviously the big capital outlays have been the big winner however. (Buffet being the best example at the personal level...but AIG et al right there as well.) the bottom line amazingly enough has been that those who have taken the most risk since 2008 have yielded...and still yield...outsized returns. (first Apple now Tesla.) i'm still hanging onto my deflationary bet...as ridiculous as it sounded when i put it on after the first few weeks of this year. worked fantastic the first six months but then the Fed went off the deep end. i find it ironic that everyone says "the Fed works for Wall Street" when it was the Fed that blew up the debt bubble this summer. I fail to see how that's good for growth going forward in the near term...interest rates for Treasuries (the safety play) have now dramatically declined. we'll see if growth slows as a consequence. everything else has gone according to "the ghoulish plan." i mean who wants to be long Treasuries....ever?
    27 Sep 2013, 06:43 PM Reply Like
  • Continues to prove me right. The only "financials" worth investing in are V and MA.
    27 Sep 2013, 03:41 PM Reply Like
  • Chop ,
    cant argue with that , but noted that JPM which has had the kitchen sink thrown at it with all the negative headlines , traded UP today in a miserable tape ... HMMM .....
    27 Sep 2013, 05:49 PM Reply Like
  • i find it ridiculous to say "sound money" with all that's going on...but the massive monetizations done by Japan were until very recently very yen positive. of course i've also been told the last thing a reserve currency State wants is sound money. that sounds more than out there to me...unless of course you're setting up for a material deflating of the asset base. it's still an outlier (was WAY out there when i placed my bet this January) but actually the totality of the commodity complex has deflated and the huge REIT bubble has now been burst. equities have been spectacular...especially small caps. but without any generalized growth it's easy to see how significant imbalances might appear yet again (ala 2008) causing there to be a big rally in treasuries yet again.
    27 Sep 2013, 06:56 PM Reply Like
  • Yeah... that 48% gain I have in Citi and the 35% gain in JPM really were a complete waste of my time.

     

    Seriously, I own Visa too, so I'm not complaining since I bought in at $72, but there is still a LOT of upside to these banking stocks. Someday, sooner rather then later, interest rates are going to start going up which will be good for all the major banks. Until then, a bank like WFC or JPM pay a decent interest rate and still trade below book value. And I wouldn't be surprised to see Citi with a 50% gain in the next two calendar years assuming the world economic situation continues to improve. Major profit upside in Citi.

     

    People hate the major banks because they will forever be tied to the issues of 2008. However, I really couldn't care less what happened back then when trying to decide if I should invest in them today. The major banks are all still relatively cheap and definitely investable.

     

    Therefore, let the analysts drive the prices down. I'd love to get a chance to buy more Citi in the low 40's or JPM under $50. To me, it's a no-brianer investment for the long-term holder.
    27 Sep 2013, 10:53 PM Reply Like
  • I sold my GS, which I was looking to get out of, at $168 after the JEF quarter..... Nice gain, will probably re-enter when the price is depressed to catch another run-up.

     

    Good luck!
    27 Sep 2013, 04:12 PM Reply Like
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