Traders Expect Goldman Sachs To Outshine Bear Stearns (GS, BSC, MER, MS)

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On Thursday, September 20, we get the dual reports from Bear Stearns (NYSE:BSC) and from Goldman Sachs (NYSE:GS): 

  • Bear Stearns is expected to post $1.78 EPS on $1.65 Billion in revenues. On Monday shares closed at $115.38 and saw only 3.3% rise to $119.20 on the FOMC day of Tuesday; although shares gave back almost all gains to close at $115.64 on Wednesday.
  • Goldman Sachs is expected to post $4.35 EPS & $9.55 Billion in revenues.  On Monday shares closed at $187.81 and its Tuesday rise was 6.8%, which was actually followed up with a $5.00 rise (or almost 2.5%) on Wednesday.

Lehman Brothers (NYSE:LEH) reported on Tuesday, September 18 and managed to handily beat expectations.  This was of course the morning of the same day the FOMC gave us the 50/50 rate cut, but shares closed up 10% at $64.49 on Tuesday.  On Wednesday shares closed down about 0.5% at $64.11.

Morgan Stanley (NYSE:MS) reported somewhat weaker than expected earnings on Wednesday.  Its shares had risen 5.5% Tuesday on hopes that Lehman’s results would be the same joy and on the FOMC cut; while Wednesday’s day of its own news created a 2.1% drop to $67.03.

It appears as though Wall Street has endorsed Goldman Sachs over Bear Stearns over the pre-earnings expectations if you look how the stocks have traded with the other brokers.  Keep in mind that Bear Stearns is the one that if it ever gets too weak becomes the topic of the takeover rumor mill, although that’s been an on and off rumor mill name for literally 10 years now.

Jon C. Ogg
September 19, 2007