Financial Trading Blog
Stock of the day 15/01/2015 – Goldman Sachs Group Inc
The multinational investment banking firm had a choppy 2014; however by the end of the year Goldman Sachs was up 100% on the price it started 2012, reflecting an impressive 2 years of trading. It started 2014 at $177.25, but an inconsistent first quarter led to its year-low of $151.88. After this low share prices spent the rest of the year rising, bar a brief fall in mid-October following a global market slump, to hit its 2014 peak of $198.05 at the start of December, just as the Dow Jones was reaching its record highs. Goldman Sachs then opened 2015 at $195.08, but has since fallen to $181 as bearish sentiment infected the markets for much of the start of the year.
The company’s Q3 results in October helped it recover from the market slump, as it saw net income attributable to common shareholders jump to $2.1billion from $1.4billion the previous year, alongside total net revenues rising 24.8% year on year to $8.4 billon. However, the forecasts for its Q4 results aren’t as rosy, with analysts expecting to see revenue fall to $7.6 billion, with earnings per share set to fall to $4.35 from last year’s $4.60.
Goldman Sachs’ has already been forced to cut bonuses and profits this year, as a $835 million loan to bail out Portuguese bank Banco Espirito Santo failed. And JP Morgan missed its fourth quarter targets earlier in the week, indicating a worrying trend for the big banking sector. As Bank of America and Citigroup announce results today, a better idea of the state of American banking, and its impact on Goldman Sachs, will appear this afternoon.
There are more worries for Goldman Sachs, as analysts have begun to question the resilience of Goldman Sachs’ 2 year rebound, which saw the aforementioned 100% rise in share prices from 2012 to 2014, and are wondering whether it is reaching the end of its cycle. With this in mind, the company has an average rating of ‘hold’ alongside an average price target of $195.71.
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