On Wednesday, BMO Capital Markets adjusted its outlook on Goldman Sachs Group Inc (NYSE:GS) shares, increasing its price target from $360 to $373 while retaining a Market Perform rating on the stock. The adjustment follows Goldman Sachs' second-quarter earnings, which reported a modest revenue outperformance.
The firm cited several reasons for the revised target, including a more than 3% hike in estimates, driven by higher revenues in Global Banking & Markets and lower provisions, which helped to balance out increased compensation expenses. The analyst pointed out that despite a rebound in capital markets activities, Goldman Sachs' return on equity (RoE) for the second quarter dropped below 11%.
This decline was attributed to persistent challenges from enterprise platforms, a mergers and acquisitions (M&A) market that remains 20% below long-term averages, and subdued asset management returns.
BMO Capital's new price target of $373 is based on a multiple of 1.1 times the two-year-forward tangible common equity (TCE), which itself is a product of a 12% return on TCE and a target price-to-earnings (P/E) ratio of 9 times. The firm's evaluation reflects a detailed consideration of Goldman Sachs' financial performance and market conditions.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.