On Wednesday, Oppenheimer maintained its Outperform rating on Goldman Sachs (NYSE: GS) shares and increased the price target to $614 from $577 following the company's release of its third-quarter earnings. The financial giant reported a quarterly EPS of $8.40, surpassing both the estimated $6.42 and the consensus of $6.89.
The earnings report included some minor special items, notably a charge related to the winding down of the GM Card business, which had been previously indicated. Adjusting for these items, the core operating EPS would be approximately $9.02. This adjustment suggests a core return on tangible common equity (ROTCE) of around 11.7% for the quarter.
Goldman Sachs' revenue for the quarter stood at $12.7 billion, which was not only above Oppenheimer's estimate of $11.3 billion but also represented a year-over-year increase of 7.5%. Excluding the impact of the GM Card business wind-down, the revenue growth would have been 11.0%.
The better-than-expected performance was mainly attributed to stronger investment banking and equity trading revenues. These figures suggest that Goldman Sachs has managed to thrive even amidst what is characterized as a relatively weak investment banking environment.
The adjustment to the stock price target reflects the robust financial results and the positive outlook maintained by Oppenheimer for Goldman Sachs. The new target signifies confidence in the company's ability to continue its strong performance in the coming periods.
In other recent news, Goldman Sachs has seen a series of positive developments. The company reported strong third-quarter results for 2024, with earnings per share increasing by 54% year-over-year to $8.40, and net revenues reaching $12.7 billion. In addition, the firm's return on equity (ROE) and return on tangible equity (ROTE) stood at 10.4% and 11.1%, respectively.
Analysts at Jefferies, Evercore ISI, and Barclays have all recognized this performance, raising their price targets for Goldman Sachs to $609, $575, and $588 respectively. These adjustments reflect the company's successful execution of its business strategy, which includes robust demand in the investment banking sector and a record of over $3 trillion in assets under supervision in the Asset and Wealth Management segment.
The company's Global Markets division also contributed significantly to the revenue, showing a 2% year-over-year increase, contrary to the expected 10% decrease. Goldman Sachs has been successful in raising third-party alternative capital, accumulating $303 billion since the end of 2019. These are among the recent developments at Goldman Sachs.
InvestingPro Insights
Goldman Sachs' strong performance, as highlighted in the article, is further supported by real-time data from InvestingPro. The company's market capitalization stands at an impressive $172.96 billion, reflecting its significant position in the financial sector. With a P/E ratio of 15.35, Goldman Sachs appears to be trading at a reasonable valuation, especially considering its recent earnings beat and revenue growth.
InvestingPro Tips reveal that Goldman Sachs has raised its dividend for 12 consecutive years, demonstrating a commitment to shareholder returns. This aligns with the company's strong financial performance mentioned in the article. Moreover, Goldman Sachs is trading at a low P/E ratio relative to its near-term earnings growth, which could indicate potential upside for investors.
The company's revenue growth of 11.97% over the last twelve months, as reported by InvestingPro, corroborates the 11.0% growth mentioned in the article when excluding the GM Card business wind-down. This consistent growth trajectory supports Oppenheimer's optimistic outlook and increased price target.
For readers interested in a deeper analysis, InvestingPro offers 14 additional tips on Goldman Sachs, providing a comprehensive view of the company's financial health and market position.
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