Two Ways: Goldman Set to Break Records, Break the Bank

By Terry Woo  JUL 09, 2009 5:00 PM

Strengthen your portfolio in good times and bad.


Goldman Sachs (GS) starts off the earnings round for financials next Tuesday. According to Bank of America analyst Guy Moszkowski, the firm is on track to beat its 2008 trading-revenue record by as much as 64%.

In a story by Bloomberg, Moszkowski said the New York-based firm has “unmatched risk-taking/ risk-management skills in a market that rewards these because of decline in competitor risk appetite.” He expect the bank to earn about $3.90 a share, up from his previous estimate of $2.92, and above consensus estimates of $3.42.

Moszkowski upgraded the stock from “neutral” to “buy” and set his price target to $175 from $144. He believes Goldman will set aside about 44% of its trading revenue to pay compensation and benefits. The pool for employee compensation amounts to about $17.92 billion, up from $10.9 billion last year.

Shares closed up 3.36% today, to $143.21.

From the Bull Pen: Keep an eye on the iShares iBoxx High Yield Corporate Bond ETF (HYG) which will have implications for the banks in general. Bulls wanting to play this ETF to the upside can set a sell stop right below short-term support (near $75.50).

From the Bear Cave: Minyans need to watch the developing story of the CFTC, which will possibly increase its regulation on the big banks by curbing oil trades. A very significant portion of Goldman’s revenues are derived from commodities trading, so this could have a big impact.

Thirsty Thursday, Minyans! Join the crew for a drink at Overlook Bar if you’re in the NYC neighborhood. Have a great night!
No positions in stocks mentioned.

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