Here’s what all the major analysts expect from Goldman Sachs’ earnings on Tuesday
Analysts expect another weak quarter for Goldman Sachs, but aren’t ready to turn away from the stock. The bank is expected to report its third-quarter results on Tuesday before the market opens. Analysts expect LSEG to report earnings per share of $5.31 and net sales of nearly $11.19 billion, according to estimates. That would represent a 36% decline from Goldman’s earnings of $8.25 per share, as well as a slight decline in revenue compared to the same period last year. A series of quarterly losses for Goldman would be followed by dismal results. The bank previously reported a 58% drop in profit in the second quarter, driven by high write-downs on commercial real estate and losses related to the sale of its fintech lending unit GreenSky, and an 18% drop in profit in the first quarter, driven by a decline Impact on the sale of consumer loans. The New York-based bank also suffered quarterly declines in commercial and investment banking as slower customer activity drags on due to broader economic uncertainty and higher interest rates. Shares are trading 1.9% higher on Monday. According to FactSet, short-term options indicate a share price movement of around 4.4% on the balance sheet date. GS YTD Berg Goldman Sachs share. What Analysts Think Barclays analyst Jason Goldberg sees Goldman as a longer-term investment and expects the bank’s third-quarter earnings to still reflect headwinds from commercial real estate and lower trading income before capital markets activity picks up. The bank is seeing increasing activity in investment banking – particularly in equity markets and mergers and acquisitions – as IPOs increase, Goldberg said in a statement earlier this month. While investment banking fees likely rose throughout the previous quarter, he expects further “significant improvement” in the fourth quarter through 2024. “We believe GS is well positioned to benefit from positive long-term capital market trends (trading benefits from volatile markets). “Recent revenue initiatives and focus on sustained revenue should be accretive to earnings and multiples over time,” Goldberg said. The analyst maintained his overweight rating and $437 price target on the stock, suggesting the stock could gain 41.3% from Friday’s close. Jefferies also expects Goldman to have a subdued quarter, forecasting third-quarter earnings of $5.09 per share. This is the seventh straight quarter that the company has lowered its estimates due to lower investment banking and sales and trading activity, analyst Daniel Fannon wrote. Still, Jefferies said Goldman likes it in the short term. Continued momentum around new transaction banking and wealth management initiatives, as well as increasing capital market activity in the second half of 2023, increases the company’s base price target of $387. This forecast implies an upside potential of 25%. “GS continues to meet or exceed planned milestones of its medium-term strategic objectives, resulting in multiple expansion,” Fannon wrote. Bank of America, on the other hand, sees Goldman Sachs as a bank “that operates with a healthy capital buffer and offers a particularly attractive risk-reward ratio.” Analyst Ebrahim Poonawala noted that stronger capital market activity could boost the stock. However, downside risks could also weigh on the bank, as the analyst listed a weaker economy and capital markets, macro or geopolitical issues and tighter global regulation among various risk factors. Poonawala cut its third-quarter earnings estimate to $4.97 per share from $6.79. However, he maintained his Buy rating and price target of $388 per share. Goldman’s GreenSky Sale Wells Fargo analyst Mike Mayo is more optimistic about Goldman’s earnings, but believes the bank’s decision to sell GreenSky will improve the bank’s prospects and help it return to its roots, viz “to use their historical strengths”. He lowered his third-quarter earnings estimates to $5.04 on news of the GreenSky sale. Goldman announced Wednesday that it has agreed to sell the fintech lending platform to a group of investors led by private equity firm Sixth Street. The deal will result in a 19 cent per share reduction in the bank’s third-quarter profit, Goldman said. “The sale should be helpful in several ways. First, it removes a distraction for management and helps refocus the business. Second, it should reduce risk-weighted assets based on B/S. Third, it could improve future profitability if Greensky operated at a loss within GS,” Mayo wrote in a recent note. The sale is also likely to reduce Goldman’s exposure to the U.S. consumer at a time when lower-end consumers may be weakening, he added. Wells Fargo has an Overweight rating on the stock and maintained its $390 price target – implying an upside potential of 26%.
