Preview: What to Expect From Goldman Sachs’ Earnings on Friday
The New York-based leading global investment bank Goldman Sachs is expected to report its third-quarter earnings of $10.11 per share on Friday, which represents year-over-year growth of over 4% from $9.68 per share seen in the same period a year ago.
The world’s leading investment manager would post revenue growth of over 4% to around $11.25 billion. It is worth noting that in the last two years, Goldman Sachs has surpassed market consensus expectations for profit and revenue most of the time.
“Reason to Buy: Organic growth, solid capital position and steady capital deployment activities continue to enhance Goldman’s prospects. Business diversification offers long-term earnings stability,” noted analysts at ZACKS Research.
“Reason to Sell: Geopolitical concerns and volatile client-activity levels may hinder the top-line growth of Goldman. Further, legal hassles and higher dependence on overseas revenues remain other headwinds,” ZACKS added.
In the previous quarter, growth was fueled by a strong performance in wealth management, equity underwriting, and consumer banking. In addition, increased mergers and acquisitions led to impressive revenues from financial advisory services.
However, Goldman Sachs’ Chairman and Chief Executive Officer David Solomon while detailing the second-quarter earnings in July said while the economic recovery is underway, our clients and communities still face challenges in overcoming the pandemic.
The better-than-expected number on Friday, October 15 would help the stock recoup recent losses. Goldman Sachs’ shares rose over 45% so far this year. The stock closed 0.33% higher at $386.53 on Tuesday.
Goldman Sachs Stock Price Forecast
Twelve analysts who offered stock ratings for Goldman Sachs in the last three months forecast the average price in 12 months of $440.75 with a high forecast of $540.00 and a low forecast of $370.00.
The average price target represents a 14.03% change from the last price of $386.53. From those 12 analysts, ten rated “Buy”, one rated “Hold” while one rated “Sell”, according to Tipranks.
Morgan Stanley gave the base target price of $384 with a high of $472 under a bull scenario and $217 under the worst-case scenario. The firm gave an “Underweight” rating on the financial services company’s stock.
Several other analysts have also updated their stock outlook. BMO lowered the price target to $432 from $435. Citigroup raised the price objective to $440 from $410. JPMorgan lifted the target price to $458 from $455.
“As market volatility subsides in the back half of the year and into 2022, we expect total revenues to decline 18% y/y in 2022. We are valuing the group on normalized 2023 EPS. We see even more upside elsewhere in the group, particularly in consumer finance stocks which have been under more pressure. This drives our Underweight rating,” noted Betsy Graseck, equity analyst at Morgan Stanley.
“Over time, we expect Goldman Sachs (GS) can drive some multiple expansion as management executes on its multi-year strategic shift towards higher recurring revenues.”
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