Q3 earnings of $3.03 and $10 billion of Institutional revenue cooled from the first half. I model $12.90 of next-year earnings at 15 times, a $195 stock.
Key points
- $12.90 is my next-twelve-month EPS, after a $3.03 third quarter that cooled from $3.45.
- 15 times that EPS is the multiple I use, versus 14.4 times trailing $12.60.
- $10.0 billion Institutional revenue still led the mix, but it fell 6% from the June quarter.
The call
The $181.50 price needs about $12.10 of earnings at 15 times, or $13.00 at 14 times. That is a full-year result near the last four quarters, which mixed two $3.45 prints with a $3.03 cool-down.
I expect trading to stay below the first-half peak and wealth fees to keep compounding. Institutional was 49 percent of September revenue. IPO assets and one retirement mandate drove record flows that are not all fee-paying yet. Earnings settle near $12.90, and the multiple stays 15 times.
Diluted EPS by quarter ($)Company releases through Q3 2026; Q4 2026E–Q3 2027E are mine
Valuation
| Item | Figure |
|---|
| Next-twelve-month EPS (my estimate) | $12.90 |
| Multiple | 15 times |
| Twelve-month target | $195 |
| Book value per share, June 30 | $74.05 |
| Trailing twelve-month EPS | $12.60 |
| Dividend, last twelve months | $4.15 (2.3% yield) |
Fifteen times is a wealth-platform multiple, not a trading-house multiple, and it matches the 2.45 times book already paid. Upside to $210 if equities stay hot is smaller than downside to the mid-$160s if volumes normalize. That band is a hold, not a buy.
Net revenue by quarter ($ billions)Company earnings releases through 14 Oct 2026
Risks
- Equities and prime brokerage fall faster than wealth fees rise; watch sequential Institutional revenue on the January print.
- Workplace IPO assets leave before they convert to advisory; watch fee-based flows versus net new assets.
- Cash-sweep litigation or capital rules raise funding cost; watch the 10-Q notes and CET1 versus 14.9 percent.
What would change my mind
A fourth-quarter print that holds Institutional revenue near $10 billion with wealth margin above 30 percent would justify a higher multiple and a buy.