BMO Capital raises Goldman's share price target on strong Q1 banking and market gains

BMO Capital raises Goldman's share price target on strong Q1 banking and market gains

Tuesday, Goldman Sachs Group Inc (NYSE: GS ) saw its share price target increased by BMO Capital from $349.00 to $360.00. The firm has kept its Market Perform rating on the stock. This adjustment follows Goldman Sachs' impressive first-quarter performance, which was significantly driven by gains in Global Banking & Markets (GB&M).

The investment bank reported substantial year-over-year growth in advisory services, where it outperformed its peers with a 24% increase compared to a 19% decrease among competitors. Additionally, Goldman Sachs achieved a 10% rise in both Fixed Income, Currency, and Commodities (FICC) trading and equities trading, surpassing peer averages which saw a 9% decline in FICC and a 3% increase in equities, respectively.

The revised price target is based on a multiple of 1.1 times the two-year-forward tangible common equity (TCE), which is derived from a projected 12% return on tangible common equity (RoTCE) and a target price-to-earnings (P/E) ratio of 9x. The analyst cited a combination of higher-than-anticipated revenue and lower tax expenses as the primary reasons for the improved outlook, despite an expected rise in compensation costs.

BMO Capital's analyst also noted that Goldman Sachs is positioned well in what is believed to be the early stages of the reopening of capital markets. The bank's recent performance suggests it is gaining market share across several key areas of its operations.

The price target increase reflects confidence in Goldman Sachs' ability to sustain its strong performance and capitalize on market opportunities as the financial industry continues to evolve.

InvestingPro Insights

Following the positive adjustment by BMO Capital, Goldman Sachs Group Inc (NYSE:GS) continues to demonstrate robust fundamentals. According to InvestingPro data, the company's market capitalization stands at a formidable 137.46 billion USD, with a forward-looking P/E ratio of 15.09, suggesting a reasonable valuation relative to earnings. The firm's revenue has seen a growth of 1.29% over the last twelve months as of Q4 2023, reinforcing the upward trend noted in its quarterly performance.

InvestingPro Tips highlight Goldman Sachs' consistent dividend increases over the past 12 years, with a notable 10% dividend growth as of the last twelve months. This, coupled with the company's strong return over the last five years and a large price uptick of 32.59% over the last six months, paints a picture of a resilient entity in the Capital Markets industry. For investors seeking more insights, there are additional InvestingPro Tips available that delve deeper into the company's financial health and market position.

For those considering a deeper analysis, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro. Discover comprehensive metrics and benefit from an array of tips, including 6 more listed for Goldman Sachs, to inform your investment decisions.

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