JP Morgan Securities said it continues to prefer investment banks over traditional credit banks globally, and raised its price targets on Goldman Sachs, Morgan Stanley and six others.
“Besides our fixed income over equities preference, we seek gearing to private banking with limited credit risk,” JP Morgan said and upgraded Deutsche Bank to “neutral” from “underweight.”
Fixed income remains the main earnings driver, not just in 2009, but more importantly in 2010 when fixed income revenues are expected to equal 2005-06 levels, the brokerage said.
Overall, with peak revenues in fixed income expected in 2009, staffing levels and cost are estimated to now be right-sized in 2010 rather than 2009, the brokerage added.
JP Morgan raised its price target on Goldman Sachs to $150 from $120 and on Morgan Stanley to $33 from $28.
Morgan Stanley and Goldman Sachs were among the 10 top US banks that won clearance on Tuesday to repay $68 billion in taxpayer money given to them during the credit crisis. (Reuters)