We’re Maintaining These 2 Price Targets — for Now
Let’s catch up on quarterly earnings reports from Pro Portfolio positions Bank of America ($BAC) and Morgan Stanley ($MS). Both companies delivered results that bested market expectations fueled by investment banking strength, favorable trading volumes, and asset management businesses. We see the tailwind for those revenue drivers continuing in the second half of the year.
However, after raising our price targets multiple times as IPO and M&A activity strengthened, with the Cerebras ($CBRS) and now SpaceX ($SPCX) falling below their respective IPO prices, we’ll take a wait-and-see approach when it comes to lifting our BAC and MS targets again. Should we see the strong investment banking backlogs at Goldman Sachs ($GS), JPMorgan Chase ($JPM), Morgan Stanley, BofA and others become announced transactions and offerings, that would be a catalyst for us to revisit our targets on these two holdings.
The post-earnings strength in BAC shares has returned their relative strength index (RSI) level to an overbought condition, which gives us another reason to maintain our Two rating near-term.
As for our position in MS, should the shares encroach on our price target near-term it could lead the position size to cross over the 4.5% line. That would trigger some prudent portfolio action on our part and lead us to lock in some big gains relative to the position’s average cost basis near $93.
While we monitor those top-line drivers, let’s tackle some housekeeping items:
Morgan Stanley’s new quarterly dividend of $1.15 per share, which was announced shortly after the results of the Fed’s annual bank stress tests, will be paid on August 14 to shareholders of record on July 31. Alongside its Q2 2026 results, Morgan Stanley also reauthorized a multi-year common equity share repurchase program of up to $20 billion, without a set expiration date, beginning in the third quarter of 2026.
While we thought Bank of America would address its dividend with its Q2 2026 results, that was not the case. Still, the company increased its 2026 operating leverage target to 300-400 basis points, up from more than 200 shared in April. On the company’s earnings call, there were multiple mentions of digitization, automation and AI, and Chairman and CEO Brian Moynihan indicated there will be more spending on that front with the goal of driving further productivity and expense control.
As that goal is realized it should translate into more dropping to BAC’s bottom line in the coming quarters, especially as investment banking activity remains robust. That gives us something to watch for in addition to BofA’s pending dividend announcement.
More Pro Portfolio:
- Adding to 3 Portfolio Holdings, Resetting 2 Checkpoint Levels
- 30 Signals Across the Portfolio’s 10 Themes and Strategies
- Weekly Roundup: Portfolio Extends Lead, Adds Firepower Ahead of Earnings Season
At the time of publication, TheStreet Pro Portfolio was long BAC and MS shares.
