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Investment Bank Strength Won't Last: Analyst

Tickers in this article: GS JPM C BAC MS

NEW YORK (TheStreet) -- U.S. securities giants Goldman Sachs(GS) , JPMorgan Chase(JPM) , Morgan Stanley(MS) , Bank of America(BAC) and Citigroup(C) are expected to have a strong first quarter, but that strength is likely to prove short lived, according to a research report Friday from Atlantic Equities analyst Richard Staite.

"We do not see this as a major turnaround," for bank fixed income currencies and commodities (FICC) divisions, Staite writes. That is because first quarter numbers almost always look good when compared to the fourth quarter, and this year's first quarter is likely to be weaker than last year.

Staite is particularly bearish on Morgan Stanley, which he believes "will remain at a competitive disadvantage given a lack of scale in FICC and higher funding costs."

Staite has an "underweight" rating on Morgan Stanley and an $18 price target compared to Thursday's closing price of $19.74.

The analyst believes first quarter FICC strength is "more likely to be focused on those with scale," such as Goldman and JPMorgan, with Goldman being the single biggest beneficiary. Accordingly, Staite upped his first quarter earnings estimate on Goldman to $3.61 from $2.62.

Staite also tweaked his price target on Bank of America, raising it slightly to $8 from $7.5 per share. He made no changes to his overall ratings, however, leaving Bank of America and Goldman at "neutral" and Citi and JPMorgan at "overweight."

-- Written by Dan Freed in New York.

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