2Q26 Earnings: Solid Quarter Overshadowed by a Slight EPS Miss

Research evidence excerpt

2Q26 Earnings: Solid Quarter Overshadowed by a Slight EPS Miss

Stock Performance Current Stock Price Price Target Pricing Power: Positive

Self-help: Positive

Source: Refinitiv, Morgan Stanley Research, Morgan Stanley Institutional Equities Division. The probabilities of our Bull,

Base, and Bear case scenarios playing out were estimated with implied volatility data from the options market as of 21 View descriptions of Risk Rewards Themes here

Jul 2026. All figures are approximate risk-neutral probabilities of the stock reaching beyond the scenario price in either

three-months’ or one-years’ time. View explanation of Options Probabilities methodology here

BULL CASE $72.00 BASE CASE $55.00 BEAR CASE $30.00

9.5x Bull Case 2027 EPS 8.5x Base Case 2027 EPS ~0.6x Bear Case BVPS

Faster growth environment, lower Slower growth environment, mostly higher Mild Recession. The U.S. enters a mild

unemployment. Geopolitical risk impacts are unemployment, but no credit recession in 2026 with unemployment

relatively minimal; economy accelerates cycle. Geopolitical risk keeps inflation exceeding 5%, driving credit card NCOs

sharply as GDP growth accelerates. elevated with Fed holding rates steady in higher to 6% (vs ~4% today). Fed cuts more

Unemployment drifts below 4%, driving 2026. GDP growth slows modestly as higher aggressively as risks to growth mount,

inflation well above the Fed's target through prices on imports reduces consumers' unit serving as an offset and keeping NIM more

2026, and credit improves meaningfully consumption levels, but rebounds in late elevated vs our bull case.

faster vs. base case. Higher productivity 2026. Slower employment growth drives a

drives consumer spend higher. modest increase in unemployment rate, but

without a major escalation in layoffs.