Key Takeaways:
JPMorgan upgraded Goldman Sachs and Morgan Stanley to tactical overweight, saying the market underestimates revenue from the $75 billion SpaceX IPO.
"The multiplier effect from mega-IPOs like SpaceX is a key driver of future revenue pools that is difficult to quantify externally and may be undervalued by the market," Rob Dwyer and Ayano Tsunoda, analysts at JPMorgan, said.
The two banks served as lead underwriters for SpaceX's record offering, which raised $75 billion through 555.6 million shares priced at $135 each, giving the company a $1.77 trillion valuation. The IPO surpassed Saudi Aramco's $29.4 billion haul as the largest in history. JPMorgan forecasts equity trading revenue will rise 21% year-over-year in the second quarter, FICC trading revenue will gain 7%, and overall market business revenue will increase 14%. Goldman is scheduled to report July 15 and Morgan Stanley on July 16.
The upgrade is a short-term tactical call — both stocks retain neutral formal ratings — reflecting the view that the IPO pipeline's spillover into secondary trading and financing has not been fully priced in. The MSCI World Index has gained about 10% year-to-date, providing a favorable backdrop for new issuance. The first quarter of 2026 was already the best quarter on record for equity sales and trading.
The analysts also cited heightened commodity hedging demand from Middle East tensions as a tailwind for both banks' trading operations. Goldman Sachs and Morgan Stanley trade at price-to-earnings multiples in the mid-to-high teens, above European peers such as Barclays and Deutsche Bank, which trade in the mid-single digits. However, JPMorgan said the US banks' superior earnings growth momentum, driven by robust domestic exchange volumes and expanding balance sheets for financing, justifies the premium.
The tactical upgrade signals that JPMorgan sees near-term upside in Goldman and Morgan Stanley ahead of earnings. Investors will watch the July 15 and July 16 reports for evidence of the SpaceX IPO's contribution to investment banking fees and secondary market activity.
This article is for informational purposes only and does not constitute investment advice.
