Keefe Bruyette & Woods Inc. analyst Brian Kleinhanzl lowered Bank of America Corp.'s stock rating to "market perform" from "outperform" and reduced the price target to $29 from $34.
The analyst tied the downgrade to his expectation that declining economic growth and fewer federal funds increases to weigh on Bank of America's shares more than its peers.
The analyst wrote that "We continue to believe that shares of [Bank of America] are higher quality, but we prefer owning shares of [JPMorgan Chase & Co.] at this time."
In addition, the analyst lowered Bank of America's EPS estimates to $2.59 from $2.60 for 2018, $2.80 from $2.90 for 2019 and $3.00 from $3.25 for 2020.
Kleinhanzl also downgraded his rating on Morgan Stanley's stock to "market perform" from "outperform" and lowered the price target to $45 from $56.
The analyst wrote that "Shares of Morgan Stanley have underperformed peers in 2018, on average, and the pull-back in global growth has been a negative headwind for the stock."
The analyst further mentioned that he expects 2019 to be a year that is generally classified as a risk-off environment and expects this to be negative for capital markets revenues broadly.
Also, the analyst reduced Morgan Stanley's EPS estimates to $4.75 from $4.85 for 2018, $4.90 from $5.25 for 2019 and $5.20 from $5.60 for 2020.