Deutsche Bank analyst Matt O’Connor said Wednesday that Goldman Sachs Group Inc. will be hard-pressed to impress investors when the marquee investment bank holds its first investor day in three years on Feb. 28.
“Our gut is that the market may be a little disappointed on the updated strategy regarding the consumer and plans to further scale asset/wealth,” said O’Connor, who kept his neutral rating on the stock.
Shares of Goldman Sachs rose 0.8% on Wednesday. The stock is up 13.5% in 2023, ahead of the 7.8% rise by the S&P 500
SPX,
and an 8.2% increase by the Financial Select SPDR ETF
XLF,
Goldman Sachs CEO David Solomon and his management team will meet with investors after a tough January when it disclosed losses in the firm’s consumer banking unit, reorganized the company into three main divisions while shedding about 3,000 jobs and falling short of its fourth-quarter profit forecast.
The moves prompted The Economist magazine to put out a cover story last month entitled “The Humbling of Goldman Sachs.” with an image of the bank’s logo with the words “Goldman Sags.”
Deutsche Bank analyst O’Connor said he expects Goldman Sachs to focus on an updated strategy for its consumer business, and how it will further scale up its wealth and asset management businesses.
CEO Solomon is expected to address how the bank will grow or gain market share in its “strong” legacy areas such as trading and investment banking, as well as how it will optimize costs against a weaker revenue backdrop, O’Connor said.
Finally, Goldman may also provide more color on its capital optimization strategy as it moves money off its balance sheet into third-party private equity funds over time.
O’Connor said he’d like to see some questions answered including how much capital would be freed up if Goldman decides to run down its lending platform at its Marcus consumer loan unit.
Goldman Sachs could also address how it would grow its direct-to-consumer asset and wealth management practice organically as well as additional color around its various financial targets such as its regulatory capital requirements, he said.
Also Read: Goldman Sachs touts effort to reduce balance sheet after tough week for stock
Credit: marketwatch.com