Goldman Sachs (NYSE:GS) plans to release fourth-quarter earnings results on Jan. 15th.
BofA Securities analyst Ebrahim H. Poonawala raised the price forecast to $1,050 from $900, while keeping a Buy rating.
The analyst notes that CEO David Solomon's biggest challenge remains managing earnings volatility.
While cyclical and regulatory tailwinds support EPS growth, investors are concerned about the swings inherent in the capital markets business, which accounts for ~70% of total revenue, adds the analyst.
The analyst writes that this volatility was highlighted by the 56% EPS drop from 2021 to 2023, although financing revenue – the "stickier" component- has outpaced trading revenue growth since 2021.
Poonawala says that Goldman's history with transformational M&A has been mixed.
Hence, the company’s future earnings stability will likely rely on expanding non-capital markets revenue, pursuing strategic bolt-on acquisitions, improving operating efficiency, and maintaining a robust capital buffer to navigate potential capital markets volatility, adds the analyst.
Analyst Forecast
For FY26, Poonawala estimates a 20% year-over-year rebound in investment banking revenue, mid-single-digit growth in trading and financing, and share repurchases in line with FY25.
By FY27, the analyst expects Goldman Sachs to approach normalized performance, with ROTCE nearing 19%, an efficiency ratio around 60%, and a CET1 ratio of roughly 13.4%.
Overall, the analyst raised estimates for EPS to $48.22 (from $47.88) for 2025, $57.30 (from $56.50) for 2026, and $67.30 (from $65.00) for 2027.
GS Price Action: Goldman Sachs Group shares were down 2.10% at $935.41 at the time of publication on Wednesday. The stock is approaching its 52-week high of $961.69, according to Benzinga Pro data.
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