4 Big Banks With Earnings Upside From Morgan Stanley
NEW YORK (TheStreet) --Morgan Stanley analyst Betsy Graseck raised first-quarter estimates for the big banks on Sunday, citing upside to capital markets revenues.
The return of the "risk on" trade is buoying fixed income trading revenues and investment banking fees are also up 14% quarter-to-date, according to the analyst. Improved consumer credit and higher refinancing fee income thanks to a better-than-expected response to the latest HARP changes also provide upside.
Here's a quick look at the revised estimates.
Bank of America
The analyst raised Bank of America's(BAC) earnings estimates for the first quarter to 3 cents from a penny previously. 2012 estimates rose to 47 cents from 40 cents previously.
Graseck expects Bank of America to reach a 7.75% Basel 3 target by the fourth quarter of 2012 and 8.9% by the fourth quarter of 2013. The bank passed the Fed's 2012 capital stress test comfortably, although it erred on the side of caution and abstained from putting in a request to return capital to shareholders. Morgan Stanley expects the bank to hike dividend in 2013 to 4 cents per quarter and start buybacks in 2014.
Shares of Bank of America were rising 1.5% to $9.94 after briefly cracking the $10 mark on Monday. Graseck has a price target of $9 per share on the bank.