Earnings Preview: Analysts bullish on Goldman Sachs into Q4 results

theflyonthewall.com

Goldman Sachs (GS) is scheduled to report Q4 earnings before the open on Wednesday, January 16, with a conference call scheduled for 10:30 am ET. Goldman is an investment banking and investment management firm. EXPECTATIONS: Analysts are looking for EPS of $3.78 on revenue of $7.91B, according to First Call. The consensus range for EPS is $2.95-$4.80 on revenue of $6.69B-$8.65B. LAST QUARTER: Goldman reported Q3 EPS of $2.85 against estimates for $2.12 on revenue of $8.35B against estimates for $7.3B. Goldman’s CEO said the company’s performance was "generally solid." The firm’s investment banking revenues surged 49% versus the same period in 2011, but client services revenue only rose 3% and net revenue from equities sank 16%. The decline in equities revenue primarily reflected significantly lower commissions and fees, due to lower market volumes, and lower net revenues in equities client execution, Goldman stated. STREET RESEARCH: Seventeen Wall Street analysts have increased their estimates for Goldman in the past four weeks, as a number of analysts predict that trading and investment banking revenue accelerated significantly last quarter, Bloomberg reported. One of the firms that raised its estimates was Credit Suisse, which on January 2 hiked its Q4 EPS estimate for the bank to $4.60 from $2.50, citing a few one-time items and a strong end to the year due to the U.S. fiscal cliff debate, improved institutional client risk appetite and stable-to-higher asset prices The firm maintained a $145 price target and Outperform rating on the shares. JMP Securities also recently became more optimistic about Goldman Sachs, as the firm upgraded the shares to Market Perform from Underperform. JMP Securities upgraded Goldman along with several other capital markets firms, citing decisions by U.S. and European policymakers to "kick the can down the road" on fiscal issues. Furthermore, core equities trading by major Wall Street investment should rise 15%, while revenue from M&A activities are poised to surge 25% in 2013, JMP Securities added. PRICE ACTION: Over the last three months, Goldman's stock has risen almost 10% to above $136, after reaching a trough of ~$114 in mid-November.

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