The structure of Wall Street's big banks has changed! The share price of Goldman Sachs (GS.US) has soared 31% year-to-date, surpassing Morgan Stanley (MS.US) for the first time in four years.
For the first time since the pandemic began, Goldman Sachs (GS) has a market capitalization higher than its long-time rival, Morgan Stanley (MS). Goldman's stock rose 2.6% on Tuesday to $168.9bn, surpassing Morgan Stanley's $168.6bn by a whisker. It took Goldman four years to overtake Morgan Stanley.
“Given the upward revision in earnings per share and the potential for long-term re-rating, Goldman is one of the best risk/reward equities in our coverage,” said Ebrahim Poonawala, a global banking analyst at UBS, who has Goldman as a top pick.
Goldman surpasses Morgan Stanley
Goldman's stock has risen 31% this year, a record, on the strength of its trading revenues and its banking business expenses. Morgan Stanley's stock has risen 11% in 2024, lagging its peers and the broader market, as its wealth management business has lagged.
Bloomberg Intelligence analyst Alison Williams wrote last week in a note: “Strong markets have driven second-quarter revenues and bank fee channels for large US banks, with a positive outlook for the back half of the year — especially for Goldman and Morgan Stanley.”
With analysts divided on Goldman and Morgan Stanley, the former's outperformance may continue. Bloomberg data shows analysts are at their most optimistic on Goldman in more than a decade.
Analysts are more optimistic on Goldman
Devin Ryan, an analyst at JMP Securities, said after Goldman reported its second-quarter results: “If Goldman continues to execute its strategic plan as we expect, we still believe the stock is attractive.”