HSBC Is Bullish On Goldman Sachs, Neutral On Morgan Stanley

Global investment bank HSBC has released a research report outlining its capital markets outlook for 2017.

Throughout the report, HSBC weighed in on some of the company’s banking counterparts, including Goldman Sachs Group Inc GS and Morgan Stanley MS.

Goldman Sachs: Buy, $250 Price Target

HSBC is bullish on Goldman Sachs’ business in 2017, citing a strong investment banking outlook and diversification of its top investment banking business. Goldman Sachs is one of HSBC’s top three global investment banking picks.

“Strong capitalization should allow the group to outpace capital markets and pursue higher market share, whilst continuing share buyback and dividend payouts,” said HSBC in the report.

Keys For Goldman In 2017

• A well-diversified capital markets business should benefit from improving investment banking revenues and a more favorable regulatory environment.
• An evolving corporate strategy with the introduction of new income streams, including stable corporate lending and unsecured personal lending.
• If the United States raises interest rates, it will reflect nicely on Goldman’s balance sheet.

HSBC has initiated coverage on Goldman Sachs with a Buy rating and a $250 price target.

Morgan Stanley: Hold, $42 Price Target

HSBC took a different take on Morgan Stanley and initiated coverage with a Hold rating and a price target of $42. Morgan Stanley has emerged as a different bank following the financial crisis, with 50 percent of revenues coming from the asset gathering business. HSBC analysts feel the stock is fully valued at current levels.

Keys For Morgan Stanley In 2017

• The group has clear short- and medium-term strategies to grow the wealth management business through lending expansion and cost control discipline.
• Continued AUM growth to support recurring revenues.
• A better outlook for the capital markets could boost investment banking activity in institutional securities.

Goldman Sachs shares were up 1.98 percent at last check, seen at $227.69. Morgan Stanley shares were up 0.33 percent at $41.97.