Goldman’s 1Q Results Exceed Expectations As Revenues Outperform; Shares Gain

Shares of Goldman Sachs Group jumped 2.3% to close at $335.35 on April 14 after the investment bank reported better-than-expected first-quarter results. Top-line growth, driven by significant performance in all segments, was the primary driver.

Goldman’s (GS) 1Q earnings of $18.60 per share topped the Street’s estimates of $10.22 per share and advanced significantly on a year-over-year basis. Total revenue more than doubled to $17.7 billion and comfortably surpassed the consensus estimate of $12.61 billion.

Investment banking revenues were $3.7 billion in the quarter, up 73% year-over-year driven by outstanding performance in the underwriting business. Global markets and consumer and wealth management divisions recorded 47% and 16% jumps, respectively. Asset management revenues came in at $4.6 billion compared to negative revenues of $96 million in the prior-year quarter.

Goldman’s total operating expenses jumped 46% year-over-year, which reflected an 87% rise in compensation and benefits. (See Goldman stock analysis on TipRanks)

Goldman retained its #1 ranking in worldwide announced and completed mergers and acquisitions, global equity and equity-related offerings, and common stock offerings for the year-to-date, the bank said.

Following the 1Q results, Oppenheimer analyst Chris Kotowski increased the stock’s price target to $497 (48.2% upside potential) from $468 and maintained a Buy rating.

Kotowski said, “Goldman remains a favorite and our seemingly exorbitant $497 price target is based on a 70% relative P/E, which seems conservative.”

“Goldman is less at risk than peers of significant COVID-19- related loan losses and is well poised to take advantage of heightened activity in global capital markets,” the analyst added.

The rest of the Street is cautiously optimistic about the stock with a Moderate Buy consensus rating. That’s based on 11 Buys, 5 Holds, and 1 Sell. The average analyst price target of $370 implies 10.3% upside potential to current levels. Shares have increased more than 87% over the past year.

Goldman scores an 8 of 10 from TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.

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