First thing Tuesday morning, two more big banks will report earnings along with a regional bank that serves the cryptocurrency sector.
Goldman Sachs
Goldman Sachs Group Inc. (NYSE: GS) has posted a 12-month share price decline of about 5.2%, far smaller than any of the nation’s other biggest banks.
Goldman started cutting what eventually will be a total of around 3,200 jobs last week. On Wednesday, the firings spread globally to Goldman offices from New York to Hong Kong. The bank has also revealed that it lost $1.2 billion in the first nine months of last year on its foray into consumer banking and $3 billion since the unit’s inception in 2020. The bank’s outlook may figure more heavily into how investors respond to earnings than do the quarterly numbers themselves.
Of the 24 analysts covering the stock, 14 have a rating of Buy or Strong Buy and nine more have Hold ratings. At a recent price of around $364.50 a share, the upside potential based on a median price target of $397.50 is 9.1%. At the high price target of $495.00, the implied upside is 35.8%.
Fourth-quarter revenue is forecast to come in at $10.91 billion, which would be a decline of 8.9% sequentially and a drop of 13.7% year over year. Adjusted EPS are forecast at $5.77, down 30.1% sequentially and by 87.3% year over year. The current estimates for the 2022 fiscal year call for revenue of $47.7 billion, down 19.6%, and EPS of $32.69, down 45%.
Goldman stock trades at 9.1 times expected 2022 EPS, 10.1 times estimated 2023 earnings of $36.17 and 8.9 times estimated 2024 earnings of $41.27 per share. The stock’s 52-week trading range is $277.84 to $396.87. Goldman pays an annual dividend of $10.00 (yield of 2.7%). Total shareholder return for the past 12 months was negative 3.88%.
Morgan Stanley
Morgan Stanley (NYSE: MS) has seen its share price drop by 13% over the past 12 months. Shares have gained about 17% over the past three months, thanks primarily to higher interest rates.
Last month the bank fired about 2% of its workforce (some 1,600 jobs). The bank’s wealth management advisers appear to have escaped unscathed. The job cuts follow a demand that staff return to their offices five days a week. The bank also stands to write down its portion of a $4 billion loan to support Elon Musk’s purchase of Twitter.
According to a Bloomberg report Friday morning, Morgan Stanley, BofA and Barclays are the most exposed of the big banks to risky loans and bonds totaling some $40 billion.
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