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雷达卡
By Ryan Williams
Published: July 9, 2009 9:44 a.m. ET
Time (EDT)Goldman Sachs Group Inc.10:0011:0012:001:002:003:00
[backcolor=rgba(255, 255, 255, 0.901961)]$175.0[backcolor=rgba(255, 255, 255, 0.901961)]$175.5[backcolor=rgba(255, 255, 255, 0.901961)]$176.0[backcolor=rgba(255, 255, 255, 0.901961)]$176.5[backcolor=rgba(255, 255, 255, 0.901961)]$177.0[backcolor=rgba(255, 255, 255, 0.901961)]$177.5[backcolor=rgba(255, 255, 255, 0.901961)]$178.0
NEW YORK (MarketWatch) -- Analysts at Merrill Lynch upgraded shares of Goldman Sachs Group Inc. to buy from neutral Thursday, saying strong trading and investment banking revenues, along with gains in principal investing should eventually carry the firm to a new price target of $175 a share.
In total, the analysts increased their second quarter earnings estimate for GoldmanGS, +2.51% which is slated to announce results on July 14, from $3.90 from $2.92 a share. Analysts polled by Thompson Reuters, on average, expect the investment bank to report net income of $3.42 a share for the previous quarter.
"We view Goldman as the best-diversified, most global franchise in the industry, with ample international growth prospects," the analysts wrote.
Further, full year 2009 and 2010 earnings were raised to $16.30 from $14.06 a share, and to $19.78 from $17.63 a share, respectively, according to the report.
The new price target for Goldman shares represents about a 26% premium to Wednesday's closing price of $138.55 a share. Previously, the analysts' price target was $144 a share.
Saying trading conditions remained favorable throughout the quarter, Merrill analysts adjusted trading return on assets upwards to 3.2% from 2.9%, adding 43 cents a share to second-quarter earnings.
"Goldman Sachs has consolidated its top-tier position among capital markets firms, combining front-rank banking franchise with unmatched risk-taking/risk-management skills in a market that strongly rewards these because of decline in competitor risk appetite," the analyst wrote.
Despite weak merger and acquisition activity, the last three months "could be a record for Goldman in equity underwriting, though volume data is skewed by their own capital raises," the wrote.
Nevertheless, the analysts expect a surge in equity underwriting to add 11 cents a share to second-quarter results.
Next, Goldman should realize strong contributions from its principal investments, particularly in its stake in Industrial and Commercial Bank of China, along with other debt and equity positions.
"Continued asset price movement, offset by real estate losses, should drive principal revenues," they wrote.
Consequently, a 39% rise in ICBC's share price in the second quarter will add 26 cents to the bottom line. Corporate investment grade and high yield bond prices jumped 10% and 27%, respectively, in the quarter according to Merrill's indices, suggesting gains on credit investments of 13 cents a share, the analysts said.
Ultimately, the risks to the new estimates include a drop-off in equity and debt trading, and underwriting trends. Continued real estate deterioration could also harm levered exposure to real estate funds, the analyst said.
Still, "Goldman Sachs is arguably the most well-respected investment bank, especially after deftly navigating the 2007-2008 credit crisis," they wrote.
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