JPMorgan-US Investment Banks Model Updates-110243708

Europe Equity Research09 September 2024J P M O R G A Nwww.jpmorganmarkets.comUS Investment BanksModel UpdatesEuropean BanksKian Abouhossein AC(44-20) 7134-4575kian.abouhossein@jpmorgan.comJ.P. Morgan Securities plcAmit Ranjan(44-20) 7134-4576amit.x.ranjan@jpmorgan.comJ.P. Morgan Securities plcKenneth B. Worthington, CFA(1-212) 622-6613kenneth.b.worthington@jpmorgan.comJ.P. Morgan Securities LLCSpecialist Sales contact details:Gigi Sparling - Specialist Sales - European Financials(44-20) 7134-0355ghislaine.sparling@jpmorgan.comWe update our Models for GS and MS to mainly reflect our view of better FICC Revenue progression in 2025E as we believe increased uncertainty around Rates outlook leads to higher volatility resulting in increased client activity in Macro businesses. We lower our IB fee expectations as we assume increased volatility could “push out” some of the deal flow.•We leave our adj. EPS estimates for GS broadly unchanged with higher FICC Revenue forecast offset by lowered IB Fee expectations. GS recently received a lower Stress Capital Buffer of 6.2% vs. 6.4% expected post Stress Test results - this helps our capital calculation in the SOP leading to a new Dec-25 SOP based PT of $472 (from $464 previously). •We leave our adj. EPS estimates for MS broadly unchanged with higher FICC Revenue forecast offset by lowered IB Fee expectations.Equity Ratings and Price TargetsMkt CapRatingPrice TargetCompanyTicker($ bn)Price ($)CurPrevCurEnd DatePrevEnd DateGoldman SachsGS US156.45479.61OWn/c472.00 Dec-25464.00n/cMorgan StanleyMS US156.3896.59Nn/c91.00 Dec-25n/cn/cSource: Company data, Bloomberg Finance L.P., J.P. Morgan estimates. n/c = no change. All prices as of 06 Sep 24.See page 6 for analyst certification and important disclosures, including non-US analyst disclosures.J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.2Kian Abouhossein AC(44-20) 7134-4575kian.abouhossein@jpmorgan.comEurope Equity Research09 September 2024J P M O R G A NInvestment Thesis, Valuation and RisksGoldman Sachs (Overweight; Price Target: $472.00)Investment ThesisWe remain OW GS. We welcome the ongoing refocusing of the Group, as reflected in the sale of the Marcus loan book, the sale of Greensky, PFM as well as other measures to refocus on core businesses. 1H 24 showed the gearing of GS to improvement in capital markets activity and we expect the focused strategy around Global Banking & Markets and Asset & Wealth Management to result in an improved and “less noisy” performance in 2024. We remain OW with a preference for GS over MS.ValuationWe value the Group on a SOTP basis with P/E multiple for different divisions differentiated by the quality of the franchise, e.g. we use higher IB and Global