HSBC Sees ‘Unattractive’ Risk Reward for Goldman Sachs, Morgan Stanley

Goldman Sachs Group Inc. and Morgan Stanley shares are offering an “unattractive risk reward profile” in the wake of the recent rally in bank stocks, HSBC analysts said, adding that investors should be wary of arguments that an investment banking “supercycle” will drives shares much higher.

The analysts led by Saul Martinez said that while investment banking fees likely will increase, their estimates for Goldman Sachs and Morgan Stanley already factor in around a 30% increase from 2024 levels. “We think market expectations are much higher than they have been, leaving room for disappointment,” Martinez said in a note, downgrading both banks to hold from outperform.