US Investment Banks: Model Updates

We update our Goldman Sachs model post strong 3Q results, raising our 2026/27/28E EPS by 10%/6%/5%, mainly on higher revenues partly offset by higher costs. Our new Dec-27 SOP-based price target is $970 (from $955), driven by the EPS upgrades; GS trades at 12.2x P/E and 2.3x P/TBV for 20.2% RoTE in 2028E. We rate the shares Neutral. We also update our Morgan Stanley model post mixed 3Q results, with only a limited 2%/2%/1% p.a. increase to our 2026/27/28E adjusted EPS forecasts on higher revenues partly offset by higher expenses. Our new Dec-27 SOP-based price target is $198 (from $195); MS trades at 13.2x P/E and 2.8x P/TBV for 21.9% RoTE in 2028E. We rate the shares Neutral. We see GS shares as fairly valued and, in a global context, continue to prefer European investment banks Barclays and DBK at significantly cheaper valuations, while for wealth management gearing we prefer UBS over MS.