Pre-Market Alert: Goldman’s Blowout

How Will Wall Street React?

By Bryan Bottarelli
Tuesday, June 13, 2006 9:20 AM EST
Tue, 13 Jun 2006 14:20:00 GMT

Dear Bottarelli Research Member,

It was another bloody night of trading for the international markets. Nearly every major index was down at least 2%. Japan’s Nikkei closed down a whopping 614 points — one of its biggest single-day drops in history.

With that backdrop, Goldman Sachs (GS – NYSE) announced their May results, and as we expected, the numbers were absolutely blowout.

This morning, the firm announced earnings of $2.31 billion, or $4.78 a share, compared with $865 million, or $1.71 a share in the year-earlier period. Thomson First Call had expected $4.28 a share, so they beat estimates by $0.50. Their total net revenue came in at $10.10 billion compared to $4.81 billion last year, a 109% jump. These numbers now represent the strongest quarter in 6 years at Goldman’s investment banking unit, showing what a true powerhouse GS has become.

GS

Now, the key component is how Wall Street reacts to this news. As you know, GS was down just under $5.00 yesterday on the news from LEH, but right now, Goldman is showing a pre-market gain of $1.60. Since we’re covered from both sides, we’ll let the market action dictate how we manage this play. After all, there’s no telling how this blowout earnings report will play out in a scared market. We’ll know more when the markets open! Until then…

Lock and load

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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