A $893 stock needs about $74 of 2027 earnings at twelve times. I model $68 as trading cools from a record year, which is an $816 share.
Key points
- $17.01 third-quarter diluted EPS on $18.7 billion of net revenue, 39% higher than a year earlier.
- 18.7% annualized return on common equity, or about 20% without $450 million of accelerated giving.
- 12.4% standardized CET1, down from 12.9% in June, against an 11.4% requirement.
The call
The shares at $893 need about $74 of 2027 earnings at twelve times. Year-to-date EPS is already $55.56 after three record-ish quarters, so the market is treating this run-rate as the new floor.
I model $68 of 2027 earnings instead. Equities and financing drove the year; investment-banking backlog fell from June, CET1 tightened, and Solomon called returns above a through-cycle average. Twelve times $68 is $816.
Diluted EPS by quarter ($)- Reported and my forecast
- What $893 needs at 12x
Company releases through 3Q26; 4Q26E and 2027E are mine. Price line is $893 at 12 times.
Valuation
| Item | Figure |
|---|
| My 2027 diluted EPS | $68.00 |
| Multiple | 12 times |
| 12-month target | $816 |
| Price today | $893 |
| Implied change | -9% |
| Book value per share, 3Q26 | $373 |
Twelve times is a mid-cycle bank multiple for a firm whose CET1 just fell and whose markets mix is still more than 70% of revenue. Being right on $68 still leaves a small loss versus the market if the multiple holds; being wrong on a freeze in trading is a larger drawdown, which is why this is a sell, not a strong sell.
Net revenues by segment ($ billions)- Global Banking & Markets
- Asset & Wealth
- Platform
October 13 2026 earnings presentation, third quarter.
Risks
- Equities financing stays at record balances into 2027; watch prime balances and Asia share of revenue.
- Alternatives fundraising beats $150 billion and incentive fees stay elevated; watch AUS and fee lines.
- Basel or G-SIB rules ease enough to lift buybacks; watch year-end capital proposals.
What would change my mind
A fourth-quarter print above $18 of EPS with CET1 back above 13% would force me to raise 2027 earnings.