Keefe, Bruyette & Woods Previews Goldman Sachs Q4 Earnings

Keefe, Bruyette & Woods previewed earnings for Goldman Sachs Group Inc GS Monday and maintained an Outperform rating and $195 price target. Goldman Sachs is expected to announce Q4 and 2014 earnings on January 16 before the market open.

Analyst Brian Kleinhanzl lowered the “4Q14EPS estimate to $4.48/share from $4.84 based on activity levels during the quarter, but this is still above the consensus estimate of $4.37.

“However, we believe the variance is primarily due to differences in I&L revenues and expenses and expect investors will look past these factors and focus on results in trading and investment banking where our forecast is more in line.”

Kleinhanzl estimated revenues would come in at $7.6 billion, somewhat below consensus of $7.8 billion.

“GS's ability to capitalize on trading activity in the quarter and management’s outlook can be a key driver of stock performance at earnings. We also believe that strong Investment Banking results particularly in DCM, where industry results have been weak of late, and a positive outlook for advisory revenues could help push shares of GS higher. Meanwhile, we expect any risk management issues or signs that recent regulations could cause GS to curtail profitable activities or limit capital returns would weigh on the shares,” according to Kleinhanzl.

The firm left its 2015E and 2016E EPS unchanged at $17.00 and $18.50, respectively.

Goldman Sachs closed Monday at $185.07, down 1.22 percent.