Analyst Note| Michael Wong, CFA, CPA |
Narrow-moat-rated Goldman Sachs' relatively healthy net revenue figure for the first quarter masks substantial volatility in several of the company’s revenue lines, and we believe swings in individual revenue lines could continue in upcoming quarters. The company reported net earnings to common shareholders of $3.8 billion, or $10.76 per diluted share, on $12.9 billion of net revenue. Annualized return on tangible common equity was a strong 15.8%. We continue to believe that net revenue will normalize lower over the next couple of years and that the company’s strategic plan should be rewarded by the market over the medium term. We are maintaining our $430 fair value estimate and assess the shares as undervalued.