Goldman Sachs and Morgan Stanley have been downgraded by HSBC analysts from "outperform" to "hold" due to concerns about an "unattractive risk reward profile" following a recent rally in bank shares.
The analysts, led by Saul Martinez, believe that expectations for a significant increase in investment banking fees may be overly optimistic. While they do anticipate a rise in fees, their projections already include a 30% increase from 2024 levels. Martinez cautioned that current market expectations could lead to disappointment, as investors should exercise caution regarding the potential for an investment banking "supercycle" to drive share prices significantly higher.