Analysts stick to their ratings after Goldman investor day

The bank signaled that the savings-deposit business housed within its Marcus bank in its wealth-management unit has been performing well.

Goldman’s stock dipped 0.3% on Tuesday after moving deeper into the red than the broad market in the previous session.

Also read: Goldman explores strategic alternatives for its consumer-banking business

Jefferies analyst Daniel Fannon reiterated a buy rating on Goldman and highlighted the bank’s cost-cutting targets of $1 billion in coming years, up from its earlier estimate of $475 million, as one of the positives from the meeting.

“However, the open-ended discussion around strategic alternatives for parts of consumer platforms adds uncertainty,” Fannon said.

After generating $1.7 billion in losses in 2022, Goldman hopes to reach pretax profitability for Platform Solutions by 2025.

“With the existing card programs and transaction banking considered core, that leaves GreenSky as the outlier,” Fannon said.

Any loan growth at the unit will also require more money set aside for loan-loss provisions, which amount to “an additional headwind to reaching profitability,” he said.

Goldman is also winding down about $4.5 billion in consumer installment loans at Marcus. This activity will lower the unit’s revenue while cutting the money it needs to set aside for loan-loss provisions, Fannon said.

Odeon analyst Richard Bove reiterated his hold rating on Goldman Sachs but said the bank missed an opportunity to explain its pivotal role in the world economy and instead focused on execution under its three major business units.

While Goldman’s earnings are likely to remain stressed unless the overall investment-banking business picks up, the bank “continues to be a great and unique company,” Bove said. However, it’s not articulating a clear message, he said.

“The world has changed around it and this has negatively impacted earnings in the short run,” Bove said. “In the long run, this company will gain control of its environment because it does in fact have superior people.”

Kenneth Leon of CFRA reiterated a hold rating on Goldman Sachs, lifted his price target to $372 a share from $355 a share and focused on the bank’s options for its Platform Solutions unit while praising its “best-in-class” Global Banking & Markets and Asset & Wealth Management units.

“Attention is on the strategic/execution risk for Platform Solutions,” Leon said. “We would like to see the sale or de-risking of the card and merchant point-of-sale units to a new buyer or majority-controlled partner.”

Also read: Citi reiterates buy on Goldman ahead of investor day, with hopes for more color on bank’s growth picture