Deutsche Bank Comments on Goldman Sachs (GS) Q2

July 15, 2014 2:44 PM EDT
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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.

For an analyst ratings summary and ratings history on Goldman Sachs click here. For more ratings news on Goldman Sachs click here.

Shares of Goldman Sachs closed at $167.00 yesterday.



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