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Big Broker Earnings Expectations Continue to Tank

In what came as a surprise to no one, Citgroup cut earnings estimates for Morgan Stanley (MS) and Goldman Sachs (GS) this morning.  As shown in the chart below, 2011 EPS estimates for Morgan Stanley have now been cut in half over the past year.  Talk about an ugly chart.

Below we highlight the change in 2011 EPS estimates over the past year for six of the most widely followed US brokers.  We also highlight each stock's price change over the past year.  As shown, Morgan Stanley has seen its 2011 earnings per share estimate cut the most at 50%, followed by Bank of America (BAC) at -45.35%.  Goldman Sachs ranks third worst at -26.85%.  Citigroup (C) and Wells Fargo (WFC) have seen their 2011 EPS estimates drop by just low single digits over the last year, while JP Morgan has actually seen its 2011 EPS estimate increase by 4.33% since last June.  Not surprisingly, JP Morgan is the only stock of the bunch that has seen gains over the last year.

Below is a chart showing how 2011 EPS estimates have changed over the last year for each of the six stocks listed above.  The big drops for Morgan Stanley and Bank of America over the last few months are very noticeable.  Anyone wondering why these stocks have been such dogs recently need to look no further.  

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