On Thursday, Oppenheimer maintained its Outperform rating on Goldman Sachs (NYSE:GS) stock and increased the price target to $687 from the previous $639. The adjustment follows Goldman Sachs' exceptional fourth-quarter performance, which surpassed both Oppenheimer's and the consensus earnings estimates.
The company reported earnings per share (EPS) of $11.95, which notably exceeded Oppenheimer's estimate of $8.40 and the consensus estimate of $8.21. Trading near its 52-week high of $612.73, Goldman Sachs has delivered an impressive 63% return over the past year. InvestingPro data shows 6 analysts have revised their earnings upwards for the upcoming period, with analyst targets ranging from $450 to $782.
The substantial beat was attributed to total revenues of $13.9 billion, which was $1.8 billion higher than anticipated. This increase in revenue was partially due to the firm's trading desks delivering a robust quarter. Notably, expenses only exceeded expectations by $200 million, indicating efficient management of costs relative to the revenue surge.
With a market capitalization of $204.93 billion and trading at a P/E ratio of 14.95, Goldman Sachs shows strong fundamentals. InvestingPro analysis reveals over a dozen additional key metrics and insights available to subscribers, including detailed profitability scores and comprehensive valuation analysis.
According to Oppenheimer's analysis, approximately $500 million of the revenue outperformance originated from historical principal investments. Although these are considered legacy items as the portfolio is being wound down, they are still seen as operational since they involve the use of Goldman's capital and operational expenditure.
Importantly, the majority of the revenue beat was driven by trading activities. The company's revenue growth stands at 11.97% year-over-year, demonstrating strong operational momentum despite challenging market conditions.
The performance of Goldman Sachs' trading desks was a highlight in the quarter, underscoring the firm's ability to capitalize on market conditions. The analyst from Oppenheimer noted that while they are still anticipating a rebound in mergers and acquisitions (M&A) activity that should further boost investment banking revenues, the current results already reflect a strong operational stance.
Goldman Sachs' ability to outperform expectations, particularly in trading revenues, suggests a positive outlook for the company, as reflected in the revised price target. The firm's financial results and the increased price target by Oppenheimer signal confidence in Goldman Sachs' ongoing business strategy and market position.
In other recent news, Goldman Sachs has reported strong fourth-quarter earnings, surpassing estimates with earnings per share (EPS) of $11.95. This was largely attributed to a significant $1.5 billion revenue beat, led by a $475 million surplus in equity trading revenues. The company's Asset and Wealth Management division was also highlighted for its strong pre-tax margin, which rose to 28% in 2024, up from 10% in 2023.
In analyst news, Keefe, Bruyette & Woods (KBW) maintained an Outperform rating for Goldman Sachs, while Jefferies and Evercore ISI upheld their Buy and Outperform ratings respectively. Meanwhile, JPMorgan (NYSE:JPM) reiterated its Overweight rating for the company, following robust capital markets results.
In other developments, Goldman Sachs' CEO David Solomon indicated that the company's credit card alliance with Apple (NASDAQ:AAPL) could potentially be terminated before its 2030 contract expiration. Despite this, Goldman Sachs anticipates improvements in the return on equity, which was negatively impacted by the Apple card in the previous year. These are among the recent developments for Goldman Sachs.
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