Deutsche Bank Comments on Goldman Sachs (GS) Q2
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Deutsche Bank maintained a Buy rating on Goldman Sachs (NYSE: GS) with a price target of $181. Comments follow Q2 results. Analyst Matt O'Connor sees a good setup for the second half of the year.
"Upside came from robust ibanking fees, a rebound in fixed income trading in June and strong equity investment revenue. The beat is a good reminder of the EPS leverage at GS from better macro conditions—which often drives more ibanking activity, more equity-related revenues and, in this quarter’s case, one month of good FICC revenues. Assets declined 6% vs. 3/31, supporting the view that there’s still some optimization GS can do to its balance sheet," said O'Connor.
"Looking to 2H14 EPS, GS should benefit from 1) a robust ibanking pipeline (the strongest since 2007, in large part due to advisory—industry-wide announced M&A is up 70% Q/Q), 2) low fixed income trading comps ($1.6b of revenue on avg in 2H13 vs. $2.2b this qtr), and 4) year end comp flexibility (2H comp ratios have been 1,000bps-plus lower than 1H in each of the past two years)," he added.
Shares of Goldman Sachs closed at $167.00 yesterday.
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