(This is CNBC Pro’s live coverage of Wednesday’s analyst calls and Wall Street chatter. Please refresh every 20-30 minutes to view the latest posts.) Banks and fintech stocks were in focus among Wednesday’s early analyst calls. Wolfe Research raised its rating on Citigroup and named JPMorgan Chase a top pick. Meanwhile, KBW downgraded SoFi Technologies, noting the lender could see big losses going forward. Goldman Sachs also lowered its rating on Charles Schwab. Check out the latest calls and chatter below. 5:57 a.m. ET: Goldman Sachs downgrades Charles Schwab on lower rate outlook Goldman analyst Alexander Blostein downgraded Charles Schwab to neutral from buy, saying the stock’s valuation is not capturing the earnings risk re-introduced for the company this year as interest rate cuts are implemented. Although expectations for lowered rate cuts have recently bode well for capital markets stocks, Blostein said he expects capital velocity and transaction activity to remain below historical averages in 2024 as the higher cost of capital continues “working its way through the ecosystem.” “The perceived “rates winners” vs. “rates losers” stock moves have left valuation multiples for many stocks at or above normalized levels and broadly out of sync with our updated growth expectations,” Blostein wrote in a Tuesday note. “We expect this will result in wider dispersion in share price performance in 2024.” Shares traded about 1% lower in premarket trading Wednesday. — Pia Singh 5:40 a.m. ET: KBW is cautious on Sofi Technologies, says stock could lose more than 30% Slowing origination growth and sluggish growth in Sofi’s technology segment could be a drag on Sofi Technology’s revenue and earnings, according to Keefe, Bruyette & Woods. KBW analyst Mike Perito lowered his rating to underperform from market perform, and also cut his price target by $1 to $6.50. That suggests the stock could decline 32.6%. Shares traded 4.8% lower in the premarket. “Achieving (and sustaining) profitability in 4W23/2024 could be possible; however, we believe there are more downside scenarios to this outcome than upside, which at a premium valuation shifts us to a more cautious stance,” Perito wrote in a Tuesday note. “Capital constraints and limited profitability should slow origination growth in 2024, and while opportunities exist for growth in financial service and technology fee revenues, the duration of those opportunities is much longer than the market anticipates, in our view.” Given that the stock has recently outperformed, Perito thinks additional upside is limited to roughly 20%, while downside could be as high as roughly 64%. The analyst assumed about a $1.8 billion valuation on Sofi’s technology segment, which he said puts the market value of the bank at about $7.8 billion—which is significantly lower than peer consumer banking company Ally, suggesting a ceiling. — Pia Singh 5:40 a.m. ET: Wolfe Research names JPMorgan Chase a top pick, upgrades Citigroup JPMorgan Chase are the banks to be in for 2023, according to Wolfe Research. The firm raised its price target on the stock to $198 from $181, with the new forecast implying upside of 15.1%. Shares posted record on Tuesday, ending the day at $172.08 per share. That’s also about 0.5% below an intraday all-time high set in October 2021. Wolfe also raised its rating on Citigroup to outperform from peer perform. The firm said that, under its base case scenario — which calls for 100 basis points in rate cuts this year — JPMorgan Chase and Citigroup have “greater net interest income resiliency.” “Our analysis below suggests that the consensus bar for JPM is much lower versus peers – 2024 cons. is implying -6% decline in NII vs. the annualized 4Q23 run rate, suggesting JPM could withstand more NII pressures vs. peers and still meet cons. expectations,” they wrote. On Citigroup, they wrote: “While we still believe management’s revenue targets are much too aggressive, this has little bearing on our investment case, with valuation upside largely predicated on ‘self-help’ levers.” — Fred Imbert
All the market-moving chatter from Wall Street Wednesday morning
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