Goldman Sachs stock may be expensive, but it is one of the cheapest ways to invest in the capital markets: Analyst

Goldman Sachs stock may be expensive, but it is one of the cheapest ways to invest in the capital markets: Analyst

Keefe, Bruett Woods Analyst David Conrad reiterated Outperforms the evaluation On shares Goldman Sachs Group Inc (NYSE:GS) raised its price forecast to $690 from $686.

The analyst notes that Goldman Sachs published Impressive quarterly performanceDriven by significant gains in trading and continued growth in asset management.

According to the analyst, trading revenues rose 33% year-on-year despite the tough comparison, with shares remaining stable quarter-on-quarter amid typical seasonal trends.

The company’s strategy of leveraging its balance sheet was clear, with equity financing up 16% sequentially and 36% year over year.

While the stock remains expensive compared to historical multiples of 1.92x TBV, it is still considered an attractive option for those looking to invest in capital markets, according to the analyst.

Given strong revenues from capital markets and asset management, the analyst raises 2025 earnings estimates by $1.80 to $47.15 and 2026 earnings estimates by $0.65 to $53.00.

The analyst says there is strong demand for deal making, with backlog rising quarter-on-quarter.

The analyst notes that the strength in the markets was led by stocks, which emerged this quarter at $3.5 billion, exceeding expectations by $1.41 per share, driven by increased brokerage revenues from both derivatives and cash products.

Management fees came to $2.8 billion, representing an increase of 15% and $0.15 per share compared to KBWe estimates.

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According to the analyst, Goldman Sachs also continued to reduce its investments on the balance sheet, which now total $36.5 billion.

Price action: GS shares are trading 0.88% higher at $611.28 at last check on Thursday.

Image via Shutterstock.

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February 2022

Wells Fargo

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Morgan Stanley

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January 2022

Odeon Capital

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