As Wall Street gears up for second-quarter earnings season, Bank of America Securities has issued a bullish note on four of the largest US banks, raising earnings-per-share (EPS) estimates and price targets. The firm argues that a combination of busy capital markets and steady inflows into wealth-management arms is creating a favorable environment for JPMorgan Chase, Citigroup, Wells Fargo, and Goldman Sachs.
In a research note, BofA analysts highlighted that stronger dealmaking and trading activity are not just one-off boosts. They see these trends as durable, with the potential to lift profits over multiple years. The upgrades come as the broader market watches for signs that the rally in bank stocks can be sustained beyond the immediate quarter.
What Changed in the Forecasts
BofA made its most notable adjustments to JPMorgan and Goldman Sachs. For JPMorgan, the second-quarter EPS estimate was raised to $5.59 from $5.48. Goldman Sachs saw a bigger jump, to $14.11 from $13.18, reflecting momentum in market-driven revenue lines like trading and investment banking fees. Smaller tweaks were made for Citigroup, while Wells Fargo's expectations were largely reiterated, with the focus there more on long-term profitability goals than a single quarter's results.
The price target increases signal that analysts see these banks as undervalued relative to their earnings potential. BofA's logic centers on the operating leverage of fee-based businesses: once the infrastructure—staff, technology, and systems—is in place, each additional dollar of fee revenue can contribute more to profit than a dollar of interest income. This is a key distinction from traditional lending, where margins are tighter and more sensitive to interest rate changes.
Why Fee Income Matters More Now
For years, big banks have been shifting toward fee-generating activities like investment banking, trading, and wealth management. These businesses are less dependent on the direction of interest rates and can scale more efficiently. The current environment, with a rebound in mergers and acquisitions (M&A) and a steady flow of new stock and bond issuances, is providing a tailwind.
Wealth management, in particular, is seeing fresh inflows as clients move cash into managed accounts and advisory services. This trend is not just about the current quarter; it builds a base of recurring revenue that can support higher valuations. BofA's note spends considerable time on the second half of 2025 and even 2027, suggesting that if these fee engines prove durable, analysts can push up "out-year" profit forecasts, which often matter more for stock prices than a single earnings beat.
This aligns with broader market expectations. A recent report indicated that Wall Street banks are set for a 15% revenue jump as trading and deals surge, reinforcing the positive backdrop.
What It Means for Investors
For everyday investors, the key takeaway is that bank earnings season is about more than just the numbers for the past three months. The biggest stock moves often come from guidance and commentary about the future. If bank executives signal that deal pipelines are full and wealth inflows are accelerating, it could trigger upward revisions to profit forecasts for 2026 and beyond.
This is especially true for banks like Goldman Sachs and JPMorgan, which have large capital-markets operations. Their shares tend to be more sensitive to changes in long-term earnings expectations than to a single quarter's beat or miss. BofA's upgraded targets suggest that the analysts believe the current momentum is sustainable.
However, investors should also be aware of risks. The broader economic backdrop remains uncertain, with inflation still above central bank targets and geopolitical tensions—such as those affecting oil prices—adding volatility. A slowdown in dealmaking or a market downturn could quickly reverse the fee-income gains.
For Wells Fargo, the story is different. The bank is still working through regulatory issues and cost-cutting measures. BofA's reiterated expectations suggest that the market is waiting for clearer proof that management can grow revenue without straying from its profitability targets. That makes Wells Fargo more of a show-me story, where execution over the next few quarters will be critical.
As earnings season unfolds, the performance of these four banks will be a bellwether for the broader financial sector. If the fee-income tailwinds hold, it could support a broader rally beyond just the biggest tech stocks. Some analysts have noted that earnings season could broaden the S&P 500 rally beyond big tech, and bank results will be a key test of that thesis.
Looking Ahead
BofA's note is a reminder that for large banks, the real value lies in their ability to generate fee income that scales. As they report second-quarter results, investors should focus on management commentary about deal pipelines, wealth management inflows, and expense discipline. Those factors will determine whether the upgraded forecasts prove conservative or overly optimistic.
In the meantime, the raised price targets provide a floor for sentiment, but the market will ultimately decide based on the numbers and the outlook. For now, the tailwinds are blowing, and the big banks are well-positioned to catch them.
