-- Wealth brokers and investment banks faced uneven market activity in the first quarter due to geopolitical uncertainty, UBS Securities said in client note sent Wednesday.
For the first quarter, UBS is projecting earnings per share to be down 7% quarter on quarter and up 22% annually for wealth brokers. For investment banks, the broker is looking at a 29% slump in EPS on a quarterly basis and an 11% jump year over year.
"For wealth brokers, growth was tempered by lower March market levels, though retail trading picked up on volatility," UBS analysts, including Michael Brown, wrote. "Organic growth was solid versus expectations, with the setup improving into (2026)."
Meanwhile, momentum faded for investment banks during the quarter as pipelines shrank from the year end, "with some deals likely paused pending macro clarity, creating an activity air pocket," Brown said.
Late Tuesday, the US and Iran agreed to a two-week ceasefire. The war, which began at the end of February, spread across the Middle East and curtailed shipments through the crucial Strait of Hormuz.
UBS named Charles Schwab (SCHW) and Stifel Financial (SF) as its top picks heading into the first-quarter earnings season, saying Evercore (EVR) is "favorably positioned." Moelis (MC), Lazard (LAZ), and Raymond James Financial (RJF) are expected to "lag on a relative basis," according to the brokerage.
UBS upgraded LPL Financial (LPLA) to buy, citing an attractive valuation.
UBS lowered its price targets for wealth brokers and investment banks by 8% and 2% on average, respectively.
The brokerage expects artificial intelligence to be a key topic at the upcoming earnings season for wealth brokers.
"In the wealth space, we expect AI to improve advisor productivity, though see risks to sweep cash economics and to market share of advised assets," Brown said. "Ultimately, we see these threats as slower moving than the bears think and see forward-looking firms as well positioned to adapt and thrive."