Goodbye Alcoa. On Friday, investors will be greeted with banking news at the kickoff to the fourth-quarter earnings season with reports from Bank of America (BAC), JPMorgan (JPM) and Wells Fargo (WFC).
Analysts, generally speaking, have mixed expectations for these banks and other large financial firms.
“In general, fourth-quarter reports are expected to demonstrate limited revenue growth and strong expense control,” Richard Bove, vice president of equity research at Rafferty Capital Markets, stated in a recent research note.
“Results could be moderately better but not in line with the stock price increases. This creates a potential risk,” Bove added.
He says weak loan growth in the commercial and industrial sectors during the fourth quarter of 2016 is weighing on earnings, while real estate lending has slowed, too.
Universal bank analysts at Keefe, Bruyette & Woods, however, expect fourth-quarter results to show improving company fundamentals, and they anticipate further improvements in 2017.
“We updated estimates in the fourth quarter of 2016 (post-election) to reflect a better rate environment,” explained Brian Kleinhanzl and Michael Brown in a report earlier this week.
The group lowered its estimates for both Bank of America and Wells Fargo, though along those for Goldman Sachs, Morgan Stanley and State Street. But it raised them for Citigroup (set to report results on Wednesday) and Bank of New York (reporting Thursday).