Citi's Early Read On Goldman Earnings


Here are snippets from Citi’s first-take on Goldman earnings.

Results Impressed— GS reported 1Q EPS of $5.49 vs consensus of $4.01 and our estimate of $4.25. Revenue came in at near-record $12.78 bil vs our $11.25 bil estimate driven by a 83% q/q rebound in core FICC trading to $7.4 bil (vs our +66% q/q $6.6 bil est). Equities trading was strong up 45% q/q to $1.47 bil exceeding our $1.1 bil estimate. Principal investments also beat our expectations on $760 mil of gains from corporate investments. Overall compensation ratio was 43% vs our 48% estimate, which drove $0.70 of the EPS upside vs our estimate. Management noted the investment banking backlog was unchanged vs 4Q09. See Figure 1 for summary of actual vs estimates.

Special One-timers — One timers disclosed were small including $40 mil charitable contribution, $21 mil litigation expense, and $34 mil loss on real estate principal investments (down from a $559 mil loss last qtr). Non-comp expenses in 1Q seems a bit high to us, and may include some expense bulk.

(Via Citi, Keith Horowitz, CFA, 1Q Early Read — Strong FICC And Lower Comp Accrual Drive Beat, 20 April 2010, Note Citi has a Buy/High Risk rating on GS shares and a $240 target price.)

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