Goldman Sachs Q4 Earnings Preview: Financial Strengths And Analyst Predictions

The Goldman Sachs Group Inc GS will be reporting its fourth-quarter earnings on Jan. 16. For Q4 2023, the bank is expected to clock in $3.11 in EPS and $9.84 billion in revenue as it reports before market hours.

Goldman is one of the world’s most prominent investment banking, securities, and investment management firm. In 2023, Goldman Sachs stock gained about 11.5% vis-a-vis the broad market, which was up about 25%. Although it lagged Interactive Brokers Group Inc IBKR, it outperformed other peers such as Morgan Stanley MS, the Charles Schwab Corp SCHW and Raymond James Financial RJF.

As Goldman Sachs reports Q4 earnings and 2024 outlook, here's what analysts will be focusing on, and how the stock currently maps against Wall Street estimates.

Goldman Sachs Business & Fundamentals: Goldman Sachs’ effective debt management and robust financial positioning showcases its resilience and growth despite a competitive financial landscape. With a 28.93% operating margin and a 17.76% net income margin, the institution strategically covers 37% of its debt with cash reserves, highlighting its financial prowess.

The global financial powerhouse, has a distinct reliance on trading operations, contributing a substantial 42.76% of its revenues. While other segments fall below the 20% mark, the institution faces challenges in retail banking, with services like the Apple Card grappling with changing dynamics. Despite this, Goldman Sachs boasts notable financial metrics, showcasing substantial revenue and net income growth over the years.

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Q4 Analysts' Focus: As interest rates trend downward, Goldman Sachs is poised for substantial earnings growth in 2024. A soft landing scenario may contribute to increased M&A activities, translating to higher advisory fees. Furthermore, the link between M&A transactions and debt or equity issuance bodes well for potential underwriting fees for Goldman. Analysts will be looking for insights on Goldman’s plans and its management’s outlook for 2024.

Analyst Ratings & Consensus Estimates: The consensus rating on Goldman stock stands at a Buy, with a consensus price target of $362.29. The more recent analyst reviews have assigned much higher price targets for Goldman Sachs’ stock.

UBS, JPMorgan and Barclays have a price target of $440, $421 ad $493, respectively on Goldman Sachs’ stock. These ratings were assigned earlier this month.

Price Action: Shares of Goldman Sachs closed 0.53% lower at $377.75 on Friday.

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