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We Like Goldman's Transformation

Michael Wong, CFA, CPA (michael.wong@morningstar.com)

The company is in the middle of a front-to-back review of its business that aims to expand revenue on the front end, especially in newer business lines, and optimize expenses and capital of traditional business lines on the back end. The current Goldman narrative reminds us a lot of Morgan Stanley after its Smith Barney merger, where the company is on a trajectory of adding more stable, capital-light revenue streams but the market isn't giving the company any credit for it. Given where we are in the capital markets cycle and Goldman's investment cycle, it could take a while for the company's initiatives to clearly show in the bottom line.