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Jefferies reiterated a Buy rating on Goldman Sachs (NYSE:GS) and raised their price target on the stock to $420.00 (From $393.00) ahead of the company’s investor day on 2/28.
Jefferies analysts expect GS to reiterate their 15%-17%+ medium-term ROTCE and 60% efficiency ratio targets. Recent cost initiatives focused on headcount reductions are expected to drive $475M in run-rate savings (~$200M realized in 2023). However, this is only 2% of GS’ 2022 expense base (3% of comp).
Given the strength of fundraising and the growth in asset management revenues, Jefferies expects higher growth targets. Specifically, third-party alternative fundraising sits at $179B vs a goal of $225B (’20-’24), with GS raising $72B in 2022 alone. In 2022, GS earned $8.8B in management fees against a 2024 goal of $10B, leaving ample opportunity to accelerate this target.
The analysts wrote in a note, “For the first detailed update since 2019, we head into Investor Day expecting a thorough look through across the businesses, with a particular focus on operating efficiency, streamlining of the consumer strategy, and updates on the organic growth strategy going forward. We expect details on market share opportunities across the IB and trading businesses, which have been particular areas of strength in terms of execution. Navigating this uncertain backdrop of market volatility, elevated inflation, geopolitical conflicts, and reduced capital markets activity are all factors that will be caveated when thinking about medium-term and long-term targets. Considering all of these factors, we expect GS’ outlook to be balanced, with green shoots of strength in the near-term (i.e. trading, fund raising) and persistent optimism about the longer-term.”
GS will host its investor day meeting on Feb 28 in New York.
Shares of GS are up 0.41% in mid-day trading on Friday.
