* Cuts JPMorgan, BofA, Citigroup to "market underperform"
* Downgrades Goldman, Morgan Stanley to "market
* Expects banks' share prices to suffer on Europe concerns
May 21 Large U.S. banks, including JPMorgan
Chase & Co, and investment banks such as Goldman Sachs
will likely see their share prices and earnings fall
significantly this year on account of the growing crisis in
Europe, said JMP Securities.
JMP downgraded Goldman and Morgan Stanley to "market
underperform" from "market outperform" - its top rating. The
brokerage lowered its rating on Citigroup Inc, Bank of
America Corp and JPMorgan by a notch to "market
"Our base case scenario (60 percent chance and the basis for
our estimate cuts) is Greek exit/no contagion, where the bulge
firms would suffer some losses to Greece, and capital markets
activity still sags substantially over worries about contagion,"
analyst David Trone wrote in a note to clients.
Trone viewed the best case scenario as having a 10 percent
chance that there is no Greek exit of the euro zone, resulting
in no losses and stable capital markets activity.
According to global economists polled by Reuters earlier
this month, a slim majority - 35 out of 64 - thought Greece
would still be in the euro zone by the end of next year, while
the rest thought it would not be.
An overwhelming majority of economists - 50 out of 65
-however, agreed that Greece still poses a grave danger to the
euro zone economy and its very existence.
Analyst Trone cut his price target on shares of Goldman to
$77 from $169 and on Morgan Stanley to $11 from $26. He has a
share price target of $5.50 for Bank of America, $23 for
Citigroup and $28 for JPMorgan.
"We believe other capital markets names are safer and will
likely fall less," said Trone.
Goldman shares closed at $95.49 on Friday on the New York
Stock Exchange, while those of Morgan Stanley closed at $13.35.