Morgan Stanley's latest analyst report elevates JPMorgan Chase to Overweight, citing strong capital ratios and resilient fee income, while maintaining neutral ratings on Goldman Sachs and Morgan Stanley. The shifts signal growing confidence in banking resilience amid macro uncertainty.
- JPMorgan Chase (JPM) upgraded to Overweight with 2026 EPS forecast of $14.80
- Goldman Sachs (GS) maintained at Neutral with $38.20 2026 EPS; $37B M&A backlog
- Morgan Stanley (MS) remains Neutral with $13.60 2026 EPS forecast
- JPM's Tier 1 capital ratio at 15.2% highlights capital strength
- XLF ETF rose 0.9% on sector-specific sentiment shift
- Pre-market moves: JPM +1.7%, GS -0.3%, MS -0.1%
Morgan Stanley's equity research team has issued a revised outlook for major U.S. financial institutions, highlighting divergent performance expectations across the sector. JPMorgan Chase & Co. (JPM) received an upgraded rating to Overweight, driven by its consistent net interest margin expansion and robust loan growth in credit and consumer segments. The firm now forecasts JPM's earnings per share for 2026 to reach $14.80, up from $13.95 previously, reflecting improved asset quality and cost discipline. Goldman Sachs Group Inc. (GS) and Morgan Stanley (MS) were maintained at Neutral, although both firms are noted for their strong trading desks and exposure to M&A activity. GS is projected to deliver $38.20 in EPS for 2026, with a focus on its investment banking backlog, which stands at $37 billion—up 12% year-over-year. MS, meanwhile, is expected to generate $13.60 in EPS, supported by a stable wealth management business despite volatile equity markets. The report underscores the importance of capital efficiency and balance sheet strength as key differentiators in a rising rate environment. JPM’s Tier 1 capital ratio of 15.2% and its 3.8% return on equity are cited as benchmarks for peers. In contrast, GS and MS face margin pressure from elevated operating expenses, particularly in technology and compliance. Market reaction has been immediate, with JPM shares rising 1.7% pre-market, while GS and MS edged down 0.3% and 0.1%, respectively. The report’s implications extend to ETFs tracking large-cap financials, including the Financial Select Sector SPDR Fund (XLF), which gained 0.9% on the news. Investors are closely watching whether the momentum in JPM will spill over into other regional banks and asset managers.