Wells Fargo's Mike Mayo sees some challenges ahead for Morgan Stanley and JPMorgan . The widely followed banking analyst cut his price targets for Morgan Stanley and JPMorgan by about 10% and 17% respectively, according to a Monday note. "Morgan Stanley has been a favorite among bank investors, but we see several risks that give us caution," Mayo wrote in a Monday note on the bank. The analyst is worried about slowing asset inflows for Morgan Stanley's' wealth business along with slowing E-Trade customer engagement. The analyst reduced the firm's first quarter earnings per share estimate to $1.57 from $2.00. Also, Mayo notes the bank will benefit less from higher yields than peers. Mayo cut Morgan Stanley's price target to $94 from $104, a 9.6% cut. The new target is about 9% above where shares closed on Friday. It has an equal weight rating. Mayo also reduced the first quarter EPS estimate for JPMorgan to $2.82 from $3.00. "The lower full-year estimates reflect lower fee revenue projections (mostly capital markets-related), higher card loss rates (pulling forward normalized levels faster than previously expected), a slight uptick in reserve builds more than previously estimated, and reduced buybacks (primarily due to lower forward earnings and therefore less excess capital than previously projected)," said Mayo on JPMorgan. Mayo cut JPMorgan's price target to $150 from $180, or a 16.7% cut. The new target is roughly 11% upside from Friday's closing price. The stock has an equal-weight rating. In Monday premarket trading, shares for Morgan Stanley dipped 0.3%, while JPMorgan's stock price fell 0.6%. —CNBC's Michael Bloom contributed to this report.
The headquarters of Morgan Stanley in New York.
Shannon Stapleton | Reuters