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The Zacks Analyst Blog Highlights: Goldman Sachs, JP Morgan Chase and Morgan Stanley

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For Immediate Release

Chicago, IL – August 7, 2018 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Goldman Sachs (GS - Free Report) , JP Morgan Chase (JPM - Free Report) and Morgan Stanley (MS - Free Report) .

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Here are highlights from Monday’s Analyst Blog:

Is Goldman Sachs Still a Buy After Management Changes?

Lloyd Blankfein has been the chief executive at Goldman Sachs for twelve years. He steered the investment banking giant through the financial crisis of 2008 and has been at the helm for a string of record earnings since then. It has been long expected that Blankfein would retire and last month Goldman formally announced that President David M. Solomon would soon replace him as CEO.

Since the depths of the crisis in December of 2008, shares in Goldman Sachs have risen over 300%, from as low as $50/share to $234/share today - and even after the impressive share appreciation, Goldman still trades at less than 10 times forward earnings, netting $25/share on $36 billion in revenues. Goldman is a Zacks Rank #2 (Buy).

Blankfein will stay on as CEO until October, but Solomon has already begun to assemble the management team that will lead Goldman into the future. Today he will officially appoint former fixed-income chief Jim Esposito as Co-head of Trading, where he will join Ashok Varadhan as the leaders of the firm’s enormous trading division.

During his tenure, Blankfein significantly diversified Goldman’s range of business units, including a push into lucrative opportunities in consumer lending and cash management. The firm has lost share in Trading however, a division that is especially important to investment banks because of its potential to add outsized profits in any given period – especially during times of high market volatility when other divisions may struggle.

According to Goldman’s Q2 10-Q report, they are now fairly evenly spread across the bank’s five active divisions, with net interest income adding an additional billion or so per quarter.

Trading revenues – at $8.6 billion in the first half of 2018 – are still well behind their historical highs, topping out in 2009 at $33B. A decade ago, trading used to comprise up to 70% of revenue at Goldman, while in the most recent quarter it was only 37%. Though the more diverse revenue streams arguably make Goldman a much stronger company overall, it also means they have lost share in trading to rivals like JP Morgan Chase and Morgan Stanley, as well as hedge funds with large market-making operations like Chicago-based Citadel.

The appointment of Esposito shows that in addition to continuing to expand Goldman’s investment banking division – Solomon’s particular area of expertise – and a push into consumer banking, the new CEO intends to bolster trading results as well. This is a well rounded plan to improve the already enormously profitable investment bank.

Though Blankfein was a true Titan of the industry in bad times and good and his will be big shoes to fill, Solomon’s early moves indicates that Goldman Sachs will stay in very good hands - and remains the premier large investment bank for investors to own.

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Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.




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JPMorgan Chase & Co. (JPM) - free report >>

Morgan Stanley (MS) - free report >>

The Goldman Sachs Group, Inc. (GS) - free report >>

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