Goldman Sachs Stock Forecast | Is GS a Good Stock to Buy? (2024)

Goldman Sachs (GS) stock fell 10.2% in 2022, outperforming the S&P 500 (US500), which declined 19.8% over the year. Yet, the US investment bank appears to be bracing for an upcoming slowdown as reflected by recent reports of planned job cuts that could affect 3,200 employees, or 6.5% of its global workforce.

Goldman Sachs (GS) live stock price

Will cost-cutting revive the GS stock price hurt by fears of recession, and what other factors will drive Goldman Sachs stock forecast in 2023 and beyond?

What is Goldman Sachs (GS)?

Founded in 1885 by a German immigrant Marcus Goldman, Goldman Sachs is one of the world’s leading investment banks with operations in 35 countries and an ample portfolio of products and services for individual and corporate clients.

The company’s operations can be divided into six segments:

• Investment banking: the company provides advisory services to businesses willing to raise capital from investors.

• Global markets: Goldman acts as an intermediary, or a market maker, in the financial markets to facilitate transactions for equity, fixed income, commodities and other assets.

• Fixed income, currency and commodities (FICC): the bank facilitates trading of interest rate products, credit products, mortgages, currencies and commodities.

• Equities: the bank provides liquidity for stocks, exchange-traded funds (ETFs), and over-the-counter (OTC) instruments in equity markets.

• Asset management: this unit offers asset-management products such as mutual funds, target-dated funds and ETFs.

• Consumer & Wealth management: the bank provides advisory services to high net-worth clients including estate and retirement planning, lending, and private banking.

• Consumer banking: this unit provides products and services to individual customers such as debit and credit cards, savings and checking accounts, and other similar offerings.

As of January 2023, the US bank’s CEO was David Solomon, serving since 2018.

Goldman Sachs went public over a century ago, in 1906. The firm’s shares are listed on the New York Stock Exchange (NYSE) and trade under the ticker symbol “GS”. They are also listed in several other global stock exchanges including the Canadian NEO Exchange and the SIX Swiss Exchange.

GS stock price recovered some losses

Although past performance does not guarantee future returns, looking at the historical price action may shed some light on Goldman Sachs stock forecast as it reveals the general trend of the stock. As of 10 January, GS 10-year return amounted to a hefty 214%, outperforming S&P 500 (US500) and Dow Jones Industrial Average (US30) in the same period.

The GS stock price surged past its pre-pandemic peak in 2021 amid the equity bull market and record-low interest rates in the US. The prevailing optimism helped the bank to generate record revenues and earnings from its market-making and investment banking operations.

However, central banks across the globe started monetary tightening in 2022 leading to a sharp drop in the valuation of most financial assets. As a result, investors expected a deterioration of Goldman Sachs’s financial performance, resulting in a 22.4% drop in the GS stock value during the first quarter of 2022.

In late 2022 the stock’s performance improved with the easing of inflationary pressures, with GS rising 15.8% in the final quarter of the year. In 2023 so far the stock booked a 2.8% gain, as of 10 January.

Massive layoffs and recessionary fears

Along with other financial companies Goldman Sachs is a cyclical stock in nature, as it’s heavily dependent on the business cycle and macroeconomic backdrop. Since the majority of the firm’s revenues come from market-making activities, Goldman Sachs’s financial performance is highly influenced by investor sentiment and the state of the economy.

In anticipation of a global slowdown, the bank is planning to lay off more than 3,200 employees, as reported by Bloomberg citing people familiar with the matter. This would amount to 6.5% of the bank’s global workforce.

Although the decision could have a positive impact on Goldman’s bottom-line performance, it underpins the bank’s gloomy outlook for the business volumes and a downbeat Goldman Sachs stock forecast amid recessionary environment. Morgan Stanley’s Betsy Graseck commented for Reuters:

“With most U.S. economists forecasting either a recession or significant slowdown this year, banks will likely incorporate a more severe economic outlook.”

The chances of a US recession have increased to 96%, as per October estimates by the Conference Board.

Goldman Sachs Q3 earnings

Goldman Sachs’ third-quarter revenues declined 12% on the previous year to $11.98bn amid slower deal-making on the Investment Banking side. An overall drop in the valuation of financial assets resulted in lower fees for the Asset Management and Wealth Management units.

Meanwhile, during the first nine months of 2022, Goldman Sachs generated revenues of $36.77bn and net earnings of $9.94bn, compared to $42.03bn and $17.34bn it produced respectively during the same period a year ago.

The Global Markets segment accounted for more than half of this 9-month total, bringing in $20.54bn, followed by the Consumer & Wealth Management segment with $6.66bn.

Goldman’s operations in the Americas accounted for 60% of its revenues during the first nine months of 2022 followed by the EMEA region with 28%.

As of 30 September, Goldman amassed deposits from customers of $395bn. Meanwhile, the firm’s Assets Under Supervision (AUS) ended this period at $2.42trn. These assets are managed by both the company’s asset management and wealth management units.

The US bank will next report on 17 January, kicking off the bank’s earnings season.

Goldman Sachs stock forecasts for 2023 and beyond

The consensus recommendation for GS stock was a ‘hold’ based on 16 analysts’ views compiled by MarketBeat, as of 10 January. A total of nine analysts rated the stock a ‘buy’, five a ‘hold’ and one a ‘sell’.

The average Goldman Sachs share price forecast stood at $402.3 for the next 12 months. The highest GS stock forecast was $495 and the lowest $290.

The algorithm-based forecasting service WalletInvestor’s Goldman Sachs stock forecast for 2023 echoed the bullish sentiment, seeing the share price rising to $393 in the next year. The site’s Goldman Sachs stock forecast for 2025 was upbeat too, predicting the surge to $496.85

Final thoughts

Note that analysts and algorithm-based Goldman Sachs stock predictions can be wrong and shouldn’t be used as a substitute for your own research. Always conduct your own due diligence before trading, looking at the latest news, technical and fundamental analysis and a wide range of commentary.

Note that past performance does not guarantee future returns. And never trade more money than you can afford to lose.

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