Goldman Sachs Sees Broad EPS Pressure Across Capital Markets, Highlights Brookfield As A Standout

Goldman Sachs analyst Alexander Blostein expects macro and policy uncertainty, volatile equity markets, and declining short-term interest rates to weigh on EPS forecasts for Capital Markets stocks.

The analyst’s 2025 estimates are ~5% below consensus on average, except for Exchanges.

Blostein says Alternative Manager stocks face heightened EPS risks due to weaker realization activity (potential 30% downside to Street estimates) and a slower FRE growth trajectory, now expected to average 11% in 2025E, down from ~15% previously.

The analyst writes that Brookfield Asset Management Inc BAM appears among the most resilient, benefiting from index inclusion.

While TPG Inc. TPG and KKR & Co. Inc. KKR offer attractive valuations, further EPS estimate revisions may be necessary, adds the analyst.

On the other hand, the analyst says that the Brokers and Wealth Advisor stocks face an average 4% downside to 2025/2026 EPS estimates.

Charles Schwab Corporation SCHW is performing better (+5% first-quarter EPS beat), while Stifel Financial Corporation SF is lagging (-10% EPS miss), adds the analyst.

Blostein expects lower short-term interest rates, weaker equity markets, and slower Investment Banking activity in 2025 to weigh on EPS, though he anticipates higher cash balances in March and stronger retail engagement to provide some relief.

Meanwhile, the analyst projects Traditional Managers to face ~5% EPS downside in 2025/26, with T. Rowe Price Group, Inc. TROW and Janus Henderson Group plc JHG facing high-single-digits EPS risks in 2025/26.

Blostein expects long-term average AUM to decline ~1% q/q, with weaker second-quarter momentum.

Fixed Income and Active ETFs show strength, but Active Equities outflows may drive a -2.0% annualized organic decline, adds the analyst.

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