Goldman Sachs stock target raised by Evercore ISI

Goldman Sachs stock target raised by Evercore ISI
Credit: © Reuters.

On Tuesday, Evercore ISI increased its price target on shares of Goldman Sachs (NYSE: GS ) to $440 from the previous target of $435 while reaffirming an Outperform rating on the stock. The adjustment follows Goldman Sachs' strong fourth-quarter performance, which surpassed analyst expectations.

Goldman Sachs reported earnings per share (EPS) of $11.58 for the fourth quarter of 2023, exceeding both Evercore ISI's and the consensus estimates of $8.70 and $8.73, respectively. The firm's results were driven by a positive outlook on activity and advancements in strategic initiatives.

Management commentary highlighted increased transaction intentions among corporations and sponsors, pressure from limited partners (LPs), a favorable financing environment, and larger equity and fixed income markets to capitalize on.

The analyst praised Goldman Sachs for securing more than its usual market share across banking, trading, financing, and asset management sectors.

The company also demonstrated forward momentum on key initiatives, such as expanding financing revenue, increasing management fees, reducing on-balance-sheet principal investments with improved guidance, and achieving better operating leverage. Notably, non-compensation expenses were down by 6%, which the analyst considered a good run rate.

Goldman Sachs' Common Equity Tier 1 (CET1) ratio improved to 14.7%, indicating enhanced potential for growth and capital return. The firm's risk-weighted assets (RWA) remained stable, which the analyst likened to achieving weight loss while indulging in ice cream, attributing this to Goldman Sachs' consistent focus on RWA management.

The firm's trading performance was also noted to be strong, benefiting from a strategy of deploying and recycling capital, with the sale of holdings in HPI and Greensky (NASDAQ: GSKY ) contributing to this outcome.

InvestingPro Insights

Following the positive assessment by Evercore ISI, current metrics from InvestingPro provide further insights into Goldman Sachs' financial health and market performance. With a robust market capitalization of $137.46 billion and a P/E ratio that stands at a reasonable 15.09 for the last twelve months as of Q4 2023, Goldman Sachs demonstrates a balance of value and profitability. The company's revenue growth for the same period was a steady 1.29%, indicating a consistent upward trajectory.

InvestingPro Tips highlight Goldman Sachs' history of raising its dividend for 12 consecutive years, underscoring its commitment to shareholder returns. Additionally, the company's liquid assets surpassing short-term obligations suggest a strong liquidity position, which is crucial in the volatile capital markets industry. For investors seeking more detailed analysis, InvestingPro offers further tips on Goldman Sachs, including insights into the company's profitability and market performance over the last five years. Prospective subscribers can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, accessing a total of 9 additional InvestingPro Tips for a comprehensive investment strategy.

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