Here’s what Wall St. experts are saying about these banks ahead of earnings

JPMorgan (JPM), Citigroup (C), and Wells Fargo (WFC) are scheduled to announce quarterly results on October 13. What to watch for:

LONG BIAS ON JPMORGAN: In a research note ahead of quarterly results, BofA said that its investor conversations suggest a long bias on JPMorgan among both institutional and long/short investors. Investors are eyeing potential for further net interest income revisions while expense outlook seems well anchored. After being well-liked for most of the last two years, the firm has noted some skepticism on Wells Fargo given outlook for declining net interest income, expense/capital leverage less differentiated. Citigroup garnering interest on potential for cost-cuts to rejuvenate ROTCE improvement thesis, BofA added.

For JPMorgan, the firm revises EPS estimates higher and sees potential for upside surprise. BofA views JPM as being best positioned among its coverage to handle higher for longer interest rates. For Wells Fargo, the firm raises Q3 EPS to $1.20 vs. $1.25 consensus. The combination of declining net interest income outlook and diminished clarity on self-help – expense/capital leverage – have weighed on investor sentiment, BofA noted, adding that pace of buybacks clouded due to macro/regulatory. Lastly, the firm reduced its Q3/2023/2024 EPS on lower PPNR and higher credit costs. Stock has underperformed recently due to increased uncertainty on buybacks/positive operating leverage as well as leadership changes, BofA said.

TARGET CUTS: Earlier this week, Jefferies lowered the firm’s price target on JPMorgan to $169 from $176 but kept a Buy rating on the shares. The firm is introducing 2025 EPS estimates for its U.S. banks coverage and updating its Fed rate forecasts to reflect two cuts in 2024 and four rate cuts in 2025. Jefferies is looking for net interest income to stabilize in 2024, but there are “tons of factors” to determine how and when. The firm also lowered its price target on Wells Fargo to $43 from $48 and on Citi to $43 from $47, while keeping Hold ratings on both names.

On Tuesday, BofA lowered its price target on Citi to $50 from $60, keeping a Buy rating on the shares. Worsening revenue trends that include slowing loan growth, declining net interest margins, and tempered fees are widely expected, the firm tells investors in a research note. Rising interest rates also continue to widen mark-to-market losses on bond books, and as asset quality worsens, it should begin to “matter more” as investors brace for a credit cycle, BofA added.

Evercore ISI also cut its price target on Citi to $48 from $51, while keeping an In Line rating on the shares. Ahead of Q3 reporting season for the brokers, banks and asset managers, the firm is cutting Q3 estimates by 6% on average, stating that the backdrop remains challenging for the brokers, universals and trust banks as markets were down in the quarter, rates were higher, spreads wider and investment banking continues to “work through a slow recovery.”