HSBC upgraded Goldman Sachs to Hold and raised Morgan Stanley's price target to $105, citing Q2 results that showed investment banking revenue growth and a rebound in dealmaking.
HSBC Global Investment Research upgraded Goldman Sachs to Hold from Reduce on Friday, citing the bank's second-quarter results. The firm also raised its price target on Morgan Stanley.
The upgrade on Goldman follows a quarterly report that showed investment banking revenue rising 21% from a year earlier, driven by debt underwriting and advisory fees. Goldman's equity-trading revenue also beat expectations, HSBC said in a note.
On Morgan Stanley, HSBC lifted its price target to $105 from $97, keeping a Hold rating. The bank's wealth management business posted a 6% revenue gain in the quarter, helping offset a pullback in trading income.
Both banks have benefited from a rebound in dealmaking activity this year. Goldman's advisory backlog grew in the quarter, executives said on the earnings call, while Morgan Stanley reported a 10% rise in investment banking fees.
HSBC's rating changes follow similar moves by other analysts this month. Goldman shares are up about 20% year to date, Morgan Stanley shares roughly 13%.
Goldman Sachs (Alpha Score 49/100, Mixed) and Morgan Stanley (Alpha Score 61/100, Moderate) both trade in the Financials sector. The sector has outpaced the broader market this year, supported by higher interest income and a pickup in capital markets activity.
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