Monday, June 16, 2008


GS Goldman Sachs Earnings Preview (183.69 +5.40) -Update-

GS is expected to report Q2 earnings before the open tomorrow with the conference call following at 11 ET. Current Q2 consensus is for EPS of $3.42 on $8.74 bln in revs. They have been by far the best of breed in terms of investment banks. They have turned a profit every qtr, though Q1 was significantly below trend. The issues are pretty much the same for GS as they are for the rest of the investment banks: Write-downs, exposure to MBS (residential and commercial), liquidity concerns, and plans for generating profits in a less leveraged manner going forward. Because of their positive performance relative to their peers so far, expectations are for more of the same. Because of the black box nature of the investment banks, it is fruitless to try and predict what they will report, but they do have a history of beating analyst consensus handily. GS cut hundreds of jobs from their M&A department last week due to the slump in merger activity and will likely be asked for more specifics about it on the call. There will also be concerns if Level 3 assets rise as that is a simple way to not take write-downs, just give the asset a level 3 designation and you don't have to report a meaningful price. Recent Price Action: GS managed to hold up better than its peers during the recent financial carnage and has rallied very sharply over the past three sessions, recovering about half of what it lost over the preceding month. Technical Levels of Interest (Length of the horizontal lines correspond with the strength o

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