The first investor day in three years from Goldman Sachs Group Inc. is not widely expected to bring any huge surprises, said Citi analyst Keith Horowitz.
But when executives at the marquee investment bank take the stage on Tuesday, Horowitz is hoping for more details on how Goldman Sachs
GS,
will hit its return targets under its recently reorganized three-tier corporate structure.
“We anticipate the primary focus to be bridging the gap between current expectations and the medium-term returns target,” Horowitz said in a research note on Friday.
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Goldman Sachs is currently operating under three major units: Global Banking and Markets, Asset and Wealth Management and Platform Solutions.
Previously, it reported four units: Investment Banking, Global Markets, Asset Management and Consumer and Wealth Management.
Horowitz on Friday reiterated a buy rating on the stock and a price target of $400 a share.
Also read: Analyst keeps neutral rating for Goldman ahead of big investor day on Feb. 28
While Goldman remains a “premier global franchise,” it’s operating in a cyclical business that draws lower valuation multiples from investors, Horowitz said.
Some key points Goldman will likely emphasize include the growth potential and durable earnings stream from its Global Banking and Markets unit, as well as organic growth and a less capital-intensive business model for its Asset and Wealth Management unit, which includes its sizeable private-equity business.
As for Goldman’s Platform Solutions unit, which includes parts of its consumer-banking business, Horowitz expects to hear about a potential route to generating profits.
“We expect many questions on the Platform Solutions business, including the path to profitability and whether one of these businesses can be spun out or sold,” Horowitz said.
Citi is also expecting questions on the sizing and timing of cost-savings opportunities following the consolidation of business lines, as well as opportunities to manage capital given looming Basel III capital requirements, he said.
While 2022 was a tough year for Goldman, Horowitz said the bank remains mostly on track.
Goldman Sachs Group’s stock is up 6.2% in 2022, compared with a 3.5% increase by the S&P 500
SPX,
and a 4.4% gain by the Financial Select SPDR Fund
XLF,
Also read: Goldman discloses losses in unit that houses Apple Card, GreenSky operations
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