"Goldman Sachs (NYSE: GS) surprised investors with better-than-expected earnings while also raising equity to help replay $10 billion in TARP money," says Bill Martin In BullMarket.com.
"On the earnings front, Goldman swung back to solid profitability after turning in its first-ever quarterly loss at the end of its last fiscal year, which ended November 28th, 2008.
"Goldman earned a net profit of $1.66 billion, or $3.39 a share, compared to a Q1 2008 profit of $1.47 billion, or $3.23 a share. The results are a vast improvement over the loss of -$2.29 billion, or -$4.97 a share, reported for Q4 2008.
"Goldman Sachs has long been the best run of what were previously Wall Street's top investment banks and the strength of its trading operations were evident in the quarter.
"It certainly helps that it is one of few big Wall Street banks still standing, but we don't want to discount the fact Goldman remains very good at what it does.
"Management is confident about Goldman's long-term prospects, but wisely cautious about the economy and its impact on near-term results.
"Investors also shouldn't assume it is up, up and away for the company based on one quarter, but the improvement in the company's trading business and continued leadership as an M&A adviser bodes well for the future.
"Goldman is certainly healthy enough to go without the TARP funds; whether it will be permitted to return the money to the government depends in part on the bank stress tests government auditors are currently conducting. It also depends on whether Treasury Secretary Timothy Geithner approves the move, which isn't a certainty.
"Goldman's solid operational performance is a reason for long-term optimism, although we would like to see better performances from its units outside of FICC. Goldman still is the strongest investment bank on Wall Street.
"Our current price target of $135 also remains unchanged, and is just above 1.5x Goldman's tangible book value of $88.02, although we don't think $150 is unreasonable (1.7x tangible book) given its return on equity (ROE) potential (it was 14.3% in Q1) and it should command a higher multiple when the economy improves."
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Reader Comments (Page 1 of 1)
4-17-2009 @ 2:15PM
Iridium said...
Goldman Sachs is also the most underhanded investment bank in the world. They are a principal in the back room unreported and off the books deals that brought our economy down.
They are also a principal is artificially holding the price of oil at $50 a barrel.
In the world of corrupt institutions Goldman is at or near the top. Profit at any cost is what runs the investment group there. My wish is for Goldman to fold. It is too bad that will never happen.