Credit Suisse Predicts Lower Profits for Goldman Sachs (NYSE: GS) and Morgan Stanley (NYSE: MS)

Equities research analysts at Credit Suisse AG (NYSE: CS) are predicting that both Morgan Stanley (NYSE: MS) and Goldman Sachs Group Inc. (NYSE: GS) will see lower earnings for the third quarter as a result of “challenging market conditions” and the economic impact of new financial regulations.

Analysts at the company now predict that Morgan Stanley (NYSE: MS) will earn $0.08 per share during the third quarter, down from their previous prediction of $0.58 per share. Analysts, lead by Howard Chen, also lowered their price target on Morgan Stanley’s stock by $2.00 to $35.00. Credit Suisse’s team is now predicting overall earnings per share for 2011 of $2.56 for Morgan Stanley, down from their previous estimate of $3.15.

Credit Suisse’s analysts are now also predicting that Goldman Sachs Group Inc. (NYSE: GS) will earn $2.30 per share during the third quarter, down $0.90 from their previous estimate of $3.20. They also set a $190.00 price target which was down 5% from their previous price target of $200.00 The analysts lowered their 2010 earnings per share estimate from $15.50 to $14.45.

The Goldman Sachs Group, Inc. (Goldman Sachs) is a bank holding and a global investment banking, securities and investment management company. The Company provides a range of financial services to customers, including corporations, financial institutions, governments and high-net-worth individuals. Its depository institution subsidiary, Goldman Sachs Bank USA (GS Bank USA), is a New York State-chartered bank. It operates in three segments: Investment Banking, Trading and Principal Investments and Asset Management and Securities Services. In March 2010, the Company’s subsidiaries sold the La Francia mine and related infrastructure assets, including Concession 5160, and Adromi Capital Corp., the holder of the La Francia II concession, to a subsidiary of The Goldman Sachs Group, Inc. In May 2010, Nexen Inc. sold its natural gas trading operations to a unit of The Goldman Sachs Group, Inc.

Morgan Stanley is a financial holding company. Through its subsidiaries and affiliates, the Company operates as a global financial services company that provides its products and services to a diversified group of clients and customers, including corporations, governments, financial institutions and individuals. It operates through three business segments: Institutional Securities, Global Wealth Management Group and Asset Management. In May 2010, Invesco Ltd. acquired the Company’s retail asset management business. During the year ended December 31, 2009, it disposed its former real estate subsidiary, Crescent Real Estate Equities Limited Partnership. On May 31, 2009, the Company and Citigroup Inc. (Citi) consummated the combination of the Company’s Global Wealth Management Group and the businesses of Citi’s Smith Barney in the United States, Quilter in the United Kingdom and Smith Barney Australia. The combined businesses operate as Morgan Stanley Smith Barney Holdings LLC.

Shares of Goldman Sachs Group Inc. (NYSE: GS) traded up 2.16% during mid-day trading on Friday, hitting $147.70. Shares of Morgan Stanley (NYSE: MS)  traded up 1.38% during mid-day trading on Monday, hitting $25.02.