Goldman Sachs Analysts Remain Bullish Despite Weakest Quarter Since Pandemic Onset

Shares of Goldman Sachs Group Inc GS are trading higher into Thursday’s session following the bank’s second-quarter earnings print, which showed its weakest quarterly profits since the early stages of the COVID-19 pandemic-induced recession in 2020, and a host of analyst reactions. Here's what investors need to know.

By The Numbers: Goldman reported second-quarter earnings of $3.08 per share, down 60% year-over-year, missing the $3.18 Street estimate. Revenues of $10.90 billion squeaked past the $10.84 billion consensus.

Goldman's dip in profit was attributed primarily to the bank’s retrenchment from consumer businesses and declining real estate investments.

CEO David Solomon described the backdrop of a decline in investment banking (IB) as its worst performance in nearly a decade, although he noted signs of recovery in IB and M&A dialog.

What do the analysts think?

The Oppenheimer Analyst: Chris Kotowski referred to the second quarter as a “kitchen sink” quarter for Goldman, with significant write-downs on consumer platforms’ goodwill and real estate investments.

Despite the bad quarter, the analyst sees potential for performance improvement toward the bank’s Investor Day targets, assuming the house has been “properly cleaned.”

Kotowski noted Goldman’s total revenues exceeded estimates, with equity trading and private banking performing well. Despite the gap towards the bank’s 15% to 17% Investor Day target, Oppenheimer sees it as achievable with cost discipline and a capital markets rebound.

Oppenheimer raised its price target from $433 to $483.

The JMP Analyst: Devin Ryan highlighted a better-than-expected core result despite the messy quarter. JMP reiterated its Market Outperform rating and maintained its $450 price target.

JMP noted several optimistic trends, including a pickup in M&A dialogue, and an improved trading environment in June carrying into July. The analyst pointed out Goldman is well-positioned to deliver on its 14% to 16% through-the-cycle ROE objective as the macro backdrop improves.

JMP also highlighted Goldman’s strategic transition, including narrowing its Consumer ambitions and shifting its Asset & Wealth Management business to a less capital-intensive model.

The BMO Analyst: James Fotheringham reiterated an Outperform rating, and increased his price target from $407 to $411. The analyst cited the emergence of “green shoots” in the capital markets and expected an increase in share repurchases in the coming quarters.

While BMO acknowledged Goldman's financial targets as ambitious, it revised core EPS estimates due to higher-than-previously modeled revenues, primarily in the GB&M segment.

Despite a messy second quarter, BMO maintained a bullish outlook, with a price target indicating a potential upside of more than 20%.

GS Price action: Shares of Goldman Sachs are trading 2.73% higher to $349.83, according to Benzinga Pro.

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