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Goldman Sachs' Q2 May Suffer From Investment Banking Malaise

Goldman Sachs' Q2 May Suffer From Investment Banking Malaise

Barclays expects second-quarter earnings of Goldman Sachs Group Inc (NYSE: GS) to come in below consensus, as it expects "another subdued, albeit sequentially improved, quarter for investment banking and trading."

The brokerage, which has an Equal-Weight rating on the stock, cut its second-quarter EPS estimate by $0.36 to $3.05, below current consensus of $3.09. The Street expects revenue of $7.71 billion.

"Our 2016 and 2017 EPS estimates are now $14.60 (-$1.05) and $17.00 (-$0.05), respectively," analyst Jason Goldberg wrote in a note.

"Although we expect revenues to remain pressured and be below levels from a year ago, we do look for results across all four of its businesses (IB, ICS, I&L and IM) to improve when compared to soft 1Q16 results," Goldberg added.

Related Link: Barclays Bank Blitz: Analysts Cut Earnings Estimates For 15 Financial Stocks

The analyst expects revenues and expenses to decline 15 percent and 10 percent year-over-year, respectively. Relative to the first quarter, Goldberg sees results showing an increase in investment banking, institutional client services, I&L revenues and investment management fees.

Goldman Sachs plans to announce its second-quarter 2016 results on July 19.

Key Things To Watch For

Goldberg said investors should watch the following key items:

    1. "Pipeline health (can it make up ground? Brexit effects)"
    2. "FICC (holding its ground more so than some others)"
    3. "Job cuts (more to come?)"
    4. "Comp ratio (what does it expect for 2H16?)"
    5. "Consumer Bank (GE Online depository, Small Business lending?"

At time of writing, shares of Goldman Sachs rose 2.47 percent on the day to $150.63. Goldberg has a price target of $210.

Latest Ratings for GS

Jul 2019UpgradesMarket PerformOutperform
Apr 2019UpgradesSellHold
Apr 2019MaintainsEqual-WeightEqual-Weight

View More Analyst Ratings for GS
View the Latest Analyst Ratings

Posted-In: BarclaysAnalyst Color Earnings Price Target Previews Reiteration Analyst Ratings Trading Ideas Best of Benzinga


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