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Goldman Sachs Shares Look To Have Priced In A Strong Quarter

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Selerity Research

By: Brendan Gilmartin

Goldman Sachs (NYSE:GS) is scheduled to report 4Q 2012 earnings before the opening bell on Wednesday, January 16. The firm indicated it would provide a press release at 7:30 a.m. EST and follow with a conference call at 9:30 a.m. Please note that, in past reporting periods, Goldman Sachs reported earnings approximately 15 minutes ahead of the scheduled release time. Goldman's results also have the potential to impact the financial sector as well as the broader market gauges, particularly the index futures, given the investment bank's influence.

Outliers And Strategy

Key Measures:

  • Earnings Per Share: The current Street estimate is $3.70 (up from $3.15 90 days earlier; Range: $2.95 - $4.80) (Source: Yahoo Finance).
  • Revenues are seen coming in at $7.91 bln, up nearly 30% y/y.

At a recent $137.13, Goldman Sachs shares are up 15% since mid-December, but trade at just 10.7x forward profits and a slight premium to tangible book value of $129.69.

Technically, Goldman Sachs shares look overbought near-term, with the Relative Strength Index (RSI) hovering above the key 70-level and the shares up 15% in just the past month (see Technical Review below). With that being said, look for earnings to handily top consensus estimates of $3.70 per share in order to push the shares higher. An EPS figure at or below consensus would be seen as a meaningful disappointment.

Keep an eye on the following as sympathy plays: Morgan Stanley (MS) (reports earnings on Friday, 01/18), Jefferies (JEF), Lazard (LAZ), and Barclay's (BCS).

Recent News

01/02: According to a post on StreetInsider.com, Credit Suisse raised its 4Q 2012 earnings estimate from $2.50 to $4.60, well above the current Street forecasts. The positive view was based on expense controls and strength in the equity and investment banking divisions. The firm carries an Outperform rating and $145 price target.

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Selerity Research is a proprietary commentary & research service for financial professionals. Our team of highly experienced event analysts provide timely and relevant commentary and analysis on market-moving events related to everything from corporate earnings to key economic data announcements.

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