Goldman Sachs Group Inc. (NYSE: GS) has confirmed that it will release its Q4 2021 earnings on Tuesday, January 18, 2022, before markets open.
What to look for
For the past three years, Goldman Sachs has managed to grow its EPS at 67% each year, which has sent its share price higher. So when the company releases its Q4 2021 earnings next week, investors will be keen to see if it will post an earnings surprise.
Earnings: Stockearning’s Estimated EPS for Q4 is expected to be around $11.75 per share. In the third quarter, the company reported EPS of $14.93, surpassing estimates by 52.66%. Historical EPS performance shows that Goldman Sachs has in the last 12 quarters topped estimates ten times (83%) and missed twice (16%).
Revenue: The company’s revenue for the fourth quarter is pegged at $12 billion. Net revenue in the third quarter was $13.61 billion. For the first nine months of 2021, the company had total net revenue of $46.7 billion.
Stock movement: Goldman Sachs shares have gained 1.6% since the company released its last quarter earnings. Notably, GS shares have DOWN 27 times out of the past 47 quarters. So, the historical price reaction suggests a 57% probability of the share price going DOWN once the company reports its fiscal Q4 2021 earnings. According to the Stockearning algorithm, the predicted first-day move is 2%, while the predicted move on the seventh day is 3%.
What analysts are saying
BofA analyst Ebrahim Poonawala downgraded Goldman Sachs from “buy” to “hold” and lowered the price target from $490 to $475. Following Goldman Sachs' strong outperformance compared to competitors and the S&P over the past year, Poonawala said his outlook had been tempered by his perspective on the capital markets business, which accounts for over 70% of Goldman's revenues, and a bias to owning extra interest-rate sensitive equities in the current environment. Nevertheless, given "the Street's inclination to look past financial markets driven beats," the analyst sees the limited possibility for favorable EPS revisions.
Barclays analysts Jason Goldberg raised his price target on the stock from $483 to $556 and maintained a “Buy” rating in the shares. According to the expert, bank stocks will consistently outperform markets in 2022. While the omicron variety adds some near-term uncertainty, Goldberg writes in a research note that the sector has "many positive trends in 2022." He anticipates loan growth accelerating, with rising interest rates benefiting net interest margins.
Morgan Stanley analysts Betsy Graseck upgraded Goldman Sachs from “sell” to “hold” with a price target of $479. She recommends investors capitalize on the recent "flash sell" on large-cap bank stocks, claiming that the discovery of the omicron version of COVID-19 only delays the time to full recovery by a quarter. In addition, Graseck points to the fact that Goldman's CEO David Solomon is "laser focused" on meeting the bank's ROE/ROTCE goals; the fact that she sees the company retaining market share attained across its and trading investment banking operations and the fact that Goldman Sachs is leaning into tech, which she believes will help drive market share gains even higher.
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