Goldman Sachs price target raised, buy recommendation maintained due to stronger capital markets By Investing.com

On Tuesday, CFRA raised the price target on shares of Goldman Sachs (NYSE:NYSE:) from $553.00 to $585.00 and maintained a Strong Buy rating. This adjustment reflected expectations of higher volumes in the capital markets and increased fee income. The company’s price-to-earnings (P/E) ratio was set at 14.0, which represents a premium to the five-year historical average of 12.0. This change is based on a positive outlook for the capital markets sector.

The CFRA analyst also revised earnings per share (EPS) forecasts for the coming years. The 2024 EPS forecast was lowered by $0.60 to $37.40, but is still above the consensus of $35.40. For 2025, the EPS estimate was raised by $0.75 to $41.75, compared to the consensus of $40.50. Goldman Sachs reported third-quarter 2024 EPS of $8.40, beating consensus by $1.09, and revenue of $12.7 billion, above consensus of 11.8 Billion dollars backlog.

The company’s Global Banking & Markets segment reported 7% revenue growth due to stronger capital markets activity. A notable 20% year-on-year rise in investment banking fees was driven by debt and equity issuances. Although Fixed Income, Currencies and Commodities (FICC) revenues fell 12%, this was more than offset by an 18% increase in equity trading revenues.

Goldman Sachs’ Asset & Wealth Management division also delivered a robust performance, with revenue up 16% year-on-year. The quarter set a record for management and other fees, while assets under supervision (AUS) hit a new high of $3.10 billion. The company continues to focus on alternative investments, with AUS in this category rising to $328 billion.

In other recent news, Goldman Sachs reported a significant 45% increase in third-quarter profit, driven by robust performance in investment banking. The company’s success was highlighted by a 20% increase in investment banking fees to $1.87 billion. Similarly, leading Wall Street banks such as Bank of America and Citigroup reported a rise in investment banking fees, driven by a surge in deals and corporate bond issuances.

Goldman Sachs also raised its forecast for China’s 2024 GDP to 4.9% in response to the Chinese government’s recent stimulus measures to strengthen the economy. Meanwhile, major brokers such as JPMorgan and BofA Global Research are forecasting a 25 basis point cut in US interest rates in November.

In turn, JPMorgan Chase and Wells Fargo are preparing for a third-quarter profit decline due to a decline in interest income. Despite the current optimism, dealmakers remain cautious due to the upcoming US elections and the geopolitical situation, which could bring regulatory and other uncertainties. These are some of the recent developments shaping the financial landscape.

InvestingPro Insights

Goldman Sachs’ strong performance and positive outlook, as highlighted in the CFRA analysis, are further supported by real-time data from InvestingPro. The company’s market capitalization is an impressive $173.5 billion, reflecting its significant position in the financial sector. Goldman’s P/E ratio is 15.77 (adjusted for the trailing twelve months ending Q2 2024), closely matching CFRA’s forward P/E forecast of 14.0, suggesting a fair valuation relative to earnings.

InvestingPro Tips show that Goldman Sachs has increased its dividend for 12 consecutive years, demonstrating a commitment to shareholder returns. This is particularly notable given its recent dividend growth of 20% over the last twelve months. The stock’s strong performance is reflected in a total return of 73.67% over the past year, consistent with the positive sentiment in the CFRA report.

Investors seeking more comprehensive insights can access InvestingPro Tips, with 13 others available for Goldman Sachs. These tips could provide valuable context for the company’s financial health and market position and complement the detailed analysis in the article.

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