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Goldman (GS) Nabs Lloyd's Assurance & Inspection Services Arm

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Goldman Sachs’ (GS - Free Report) asset management division will acquire Lloyd's Register’s Business Assurance and Inspection Services line. Per a Lloyd's spokesperson, the transaction is valued at more than $100 million.

Goldman is also acquiring the seller’s cyber-security business — Nettitude. The deal is anticipated to close in the second half of 2021, conditional to regulatory approval.

The division, to be renamed LRQA, will continue to benefit from the fragmented assurance and inspection market, with its global footprint that will enable it to cater a customer base across a wide range of sectors. Markedly, it offers auditing and certification services, and is particularly prominent in the food, telecoms, automotive, manufacturing and energy sectors.

Capitalizing on this, Goldman plans to expand the business by collaborating with customers across important sectors, geographies and segments; and make the business a “leading digitally enabled assurance provider”.

With such efforts, the company is likely to move up the growth trajectory, both organically and through acquisitions. In fact, Goldman has already made a go in the business assurance sector, with investment in EcoOnline, an Oslo-listed workplace health and safety software provider.

Notably, Goldman has been focusing on business diversification. This has been the key source of Goldman’s earnings stability. In fact, within traditional banking, a diversified product portfolio has better chances of sustaining growth than many other banks, which have exited some of the areas.

Moreover, the company had ample liquidity to pursue such strategic objectives, with cash and equivalents of $191 billion as of the first-quarter end.

Shares of Goldman have gained 43.9% in the year-to-date period, outperforming the industry’s growth if 33.5%.

 

Zacks Investment ResearchImage Source: Zacks Investment Research

 

The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

However, it continues to face many investigations and lawsuits from investors and regulators. In fact, the U.S. District Judge, Vernon Broderick, recently declined requests from the company, its former CEO, Lloyd Blankfein, and former chief operating officer, Gary Cohn, to dismiss the lawsuit filed by its shareholders related to the multibillion-dollar 1Malaysia Development Bhd (1MDB) scandal. Such unfavorable developments are expected to lead to increased expenses and litigation provisions in the near term.

Stocks to Consider

JMP Group LLC’s (JMP - Free Report) earnings estimates for 2021 have been unchanged at 57 cents over the past month. Also, it carries a Zacks Rank #2 (Buy) at present.

The Charles Schwab Corporation (SCHW - Free Report) carries a Zacks Rank #2 at present. The Zacks Consensus Estimate for 2021 earnings has been unchanged at $3.18 over the past month.

Piper Sandler Companies (PIPR - Free Report) has witnessed 10.5% upward earnings estimate revisions for 2021 over the past 30 days to $12.90. Also, it has a Zacks Rank #2 at present.

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