The Federal Reserve’s Federal Open Market Committee (FOMC) is now less than a week away from cutting interest rates, at least that’s the current bet in the markets. Some Wall Street firms will do fine with lower rates. Others not so much. And a lot depends on the shape and slope of the Treasury yield curve after short-term rates head lower.

According to Keefe, Bruyette & Woods, three top banks will do well and should expect more good than harm from lower rates. What is interesting is that lower interest rates typically are expected to put pressure on most banking earnings. KBW’s anticipation is that a rate cut by the Fed will increase economic activity and also will help banks with revenues and returns in the future.

Bank of America Corp. (NYSE: BAC) was raised to Outperform from Market Perform at KBW, which also raised its target price to $36 from $32 in the call. The bank’s shares were last seen trading up 1.3% at $30.73, and its consensus analyst target price was $33.43. The Merrill Lynch unit also will benefit from better capital markets activity and assets under management.

Citigroup Inc. (NYSE: C) was raised to Outperform from Market Perform and the target price was raised to $86 from $74. Its shares were last seen up 1.3% at $72.35 in midday trading, and its consensus target price was $82.68 ahead of the call. As a reminder, Citi’s most recent earnings report means it trades at a discount to book value. Its stated book value was $79.40 per share and its tangible book value was $67.64 per share

Goldman Sachs Group Inc. (NYSE: GS) was raised to Outperform from Market Perform, and KBW raised its price target to $260 from $225. The firm believes a rate-cutting cycle will be a positive for capital markets and trading activity and that reduced economic uncertainty would be better for the investment bank. Goldman Sachs was last seen trading up just 0.7% at $221.55 in midday trading on Friday. Its consensus target price was $236.32 ahead of the call.

The CME’s FedWatch Tool is looking for a 100% probability of a Fed rate cut with the July 31, 2019 announcement. That CME FedWatch Tool has a 78.6% chance that the federal funds rate will be lowered 0.25% to a range of 2.00% to 2.25%. It also still has a 21.4% chance that a 50 basis point hike will be seen, to take fed funds down to a range of 1.75% to 2.00%.

The full list of Friday’s top analyst upgrades and downgrades included shares of Alphabet, Amazon, Bank of America, Citigroup, Comcast, Goldman Sachs, Intel, Nokia, Starbucks and many more.

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