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Barclays Raises Estimates For Morgan Stanley And Goldman Sachs

A couple of weeks ago Morgan Stanley (NYSE:MS) got the green light from Fed to buy the remaining stake of its wealth management joint venture with Citigroup Inc. (NYSE:C).

The 35 percent stake that will be acquired by Morgan Stanley (NYSE:MS) is estimated to be worth $4.7 billion. The move was an attempt to strengthen Morgan Stanley’s wealth management business in the U.S. The event was seen as a significant tailwind for the investment bank’s growth going forward, something that Barclays PLC (NYSE:BCS) (LON:BARC)’s analyst Roger Freeman thinks the market has yet to give credit for.

In a separate development yesterday, Credit Suisse bought Morgan Stanley’s wealth management business in Europe, the Middle East and the African (EMEA) market with close to $13 billion under management. The terms of the buyout are expected to be finalized by the end of this year.

When Morgan Stanley (NYSE:MS)’s capital plan of was approved, its rival Goldman Sachs Group, Inc. (NYSE:GS) was told that its plan showed weaknesses that needed significant improvements.

Barclays PLC (NYSE:BCS) (LON:BARC)’s equity research gives U.S. Brokers, Asset Managers & Exchanges neutral rating. However based on the the positive uptrends in markets that usually come into play with a new year, the firm has slightly increased its EPS and revenue estimates for the first quarter.

Barclays’ analysts have raised their core EPS estimate for Goldman Sachs Group, Inc. (NYSE:GS) to $3.99. Goldman Sachs Group, Inc. (NYSE:GS) outperfomed in its investment banking business in the first quarter; Barclays has raised it revenue forecast for the unit to $1.4 billion owing to the solid activity in equity and debt underwriting. The analysts expect an 8 percent and 17 percent  decline for FICC and equities revenues on a y-o-y basis but the segments will be up on a sequential basis.

Morgan Stanley (NYSE:MS)’s core EPS estimate has been moved higher from $0.55 to $0.60. Barclays PLC (NYSE:BCS) (LON:BARC)’s research predicts a a decline of 22 percent and 20 percent for FICC and equities revenues on a y-o-y basis.

Morgan Stanley (NYSE:MS) is expected to show higher equity underwriting activity in its investment banking arm but declining revenues from debt underwriting and advisory revenues. The challenges for MS are its commodities and rates business which are expected to report a decline.