Oppenheimer Cuts Major Bank Ratings, Sees Investment Banking Revenues at 46bps of GDP
JPM•Oppenheimer downgraded Goldman Sachs and Morgan Stanley to Underperform and cut Bank of America and Citigroup to Perform as bank valuations hit the upper end of historical ranges. The firm raised Q2 2026 and 2027 sector earnings forecasts and sees investment banking revenues reaching about 46 bps of US GDP.
1. Oppenheimer Downgrades Major Banks
Oppenheimer downgraded Goldman Sachs and Morgan Stanley from Perform to Underperform and cut Bank of America and Citigroup to Perform, stating that commercial banks are trading near the upper end of historical valuation ranges while investment banks trade well above long-term averages.
2. Revised Earnings Estimates
The firm raised its Q2 2026 earnings estimates across the sector, citing stronger trading revenues, and increased its 2027 forecasts as it projects the global investment banking wallet to reach about 46 basis points of US nominal GDP, roughly 20%–25% above normal levels.
3. Rotation into Alternative Asset Managers
While maintaining Outperform ratings on PNC Financial Services and U.S. Bancorp, Oppenheimer recommended rotating into alternative asset managers such as Ares Management, Blackstone, and KKR to capture growth beyond the mature, cyclical banking industry.
