Goldman Sachs Holds ROE Target Despite Strong Performance

Goldman Sachs CEO David Solomon recently stated that the firm is not yet ready to raise its 14% to 16% through-the-cycle return on equity (ROE) target. This announcement came during a Barclays conference on September 16 and was noted in Goldman's investor relations materials. Despite the company's strong ROE performance, 23.5% annualized in the second quarter and 21.7% for the first half of 2026, Solomon emphasized caution, suggesting that the firm will only reconsider the target if it gains confidence in consistently higher returns.

The current stock price of $893.46, as of October 5, sets the stage for the October 13 earnings report, which will test whether the stock should price in higher ROE expectations. Analysts like Jason Goldberg from Barclays noted that Goldman's stock trades at a 2.44x price-to-book multiple, implying high-teens returns over the next year. TIKR's consensus estimates project ROE near 19% through 2028, dropping to around 14.5% in 2029 and 16% in 2030.

Solomon highlighted potential drivers for higher returns, including strong performance in Asset & Wealth Management, which saw a 20% year-over-year revenue increase in the second quarter, and expectations of increased pricing power in financing. However, he also cautioned about near-term challenges, such as a muted third quarter and higher non-compensation costs. Despite these mixed signals, TIKR's advanced valuation model suggests a mid-case target price of around $1,096 by December 31, 2030, representing a potential total return of around 23%.

As Goldman Sachs prepares to report its earnings on October 13, the consensus GAAP EPS of around $14 annualizes to roughly 15% of the June 30 book value per share. An ROE near 18% would support a higher stock price, while a print at 15% or below would align with Solomon's cautious stance.