Hard To Put A Shiny Spin On Goldman's Dull Q1 Results

Goldman Sachs Group IncGSfirst-quarter earnings report

Ahead of the earnings report notable bank analyst Mike Mayo named Goldman Sachs his top pick in the space. But after the report, other analysts are now scrambling to find a reason why the report came in worse than expected at a time when financials are for the most part reporting better than expected results. Brennan Hawken of UBS maintains a Buy rating on Goldman Sachs with a $285 price target although he did acknowledge a few "noisy items" in the quarter, which for the most part cancel themselves out:

Lower than expected taxes (10 cents per share total tailwind with six cents of that from a deferred comp related benefit being modestly higher than expected).

A lower than expected comp ratio which represents a 13-cent tailwind.

A higher than expected legal charge which represents an 18-cent headwind.

Soft Capital Markets, I&L

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Hawken also highlighted Goldman Sachs' "soft" capital markets revenue performance in the quarter of $1.69 billion, which was below his $2.0 billion estimate.

Equities revenue fell year-over-year by 6 percent to $1.67 billion but did come in ahead of the analyst's $1.60 billion estimate. Also, total investment banking revenue was just in line with the analyst's $1.7 billion estimate but with a backlog that declined on a quarter-over-quarter and year-over-year basis.

Shifting over to Goldman Sachs' Investing and Lending (I&L) segment, revenue of $1.46 billion also fell short of the analyst's $1.75 billion estimate.

Bottom line, a $285 price target assumes the stock will trade at a roughly 12x multiple on Hawken's 2018 earnings per share estimate of $24.00.

At last check, shares of Goldman Sachs were down 4.74 percent at $215.54.