Goldman Sachs (GS) Stock Price and Forecast: Will Goldman smash earnings on Tuesday?

Goldman Sachs reports earnings on Tuesday, before the market opens.
Goldman has topped the 2021 tables for IPO and M&A activity.
The outlook remains strong for the investment banking giant.

Ivan Brian FXStreet

Goldman Sachs (GS) will report its Q4 earnings before the bell on Tuesday. JPMorgan (JPM) and Citigroup (C) took the ball last week and fumbled it, so can Goldman drive straight through for the touchdown? We outlined in our preview note (see here) just how strongly Goldman has performed in 2021, and we expect to see a strong set of earnings as a result. The real question is if those earnings will be enough to keep the momentum going in the stock and the larger financial sector. Friday's weak performance from Citi and JPMorgan has left the sector struggling after a strong start to the year.

Goldman Sachs stock news

Goldman is due to report earnings per share of $11.73 on revenue of $12 billion. We expect Goldman to beat on both top and bottom lines due to an exceptional year in investment banking. Goldman topped the investment bank league tables for both mergers & acquisitions and IPOs. These are the two most lucrative areas of investment banking. When you add in strong equity market returns and solid revenue from FX and fixed income, then the strength of the brand should be clear. Outlook should not be a problem given the reasonably strong macroeconomic backdrop and continued demand for yield. In an inflationary environment, Goldman will be able to increase margin and should generate sufficient fee income from investment banking to maintain strong growth rates going forward.

Goldman has beaten earnings estimates on both top and bottom lines going back to Q2 2020.

Goldman Sachs Stock Forecast

Our preview note identified the strong move already made by the financials ahead of earnings season. We felt this may result in stocks failing to push on despite good earnings. This is exactly how things played out for both Citi (C) and JPMorgan (JPM) on Friday. "Better to travel than arrive," as the old market saying goes.

However, that may actually put Goldman in a slightly more favourable position. Expectations have been lowered just in time for the big daddy to knock them out. Goldman stock gapped lower on Friday to break its own 200-day moving average. Goldman (GS) did recover to close just on the level. This will be the big test on Tuesday. Just below the 200-day MA we have the $372 support level and then $349 below.

Goldman Sachs (GS) chart, daily

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Author

Ivan Brian

FXStreet

Ivan Brian started his career with AIB Bank in corporate finance and then worked for seven years at Baxter. He started as a macro analyst before becoming Head of Research and then CFO.

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