Dow Jones investment banking giant Goldman Sachs announced a new $30 billion stock repurchase program on Friday ahead of the company's investor day on Tuesday. GS stock, positioned for a possible breakout, nudged higher Monday.
The new program replaces Goldman Sach's existing buyback plan and has no set expiration or termination date. In March 2000, the bank's board approved repurchases of up to 605 million shares.
The Wall Street Journal reported stock buybacks for S&P 500 companies are projected to surpass $1 trillion for the first time in a calendar year in 2023, according to S&P Dow Jones Indices data. As of Feb. 17, repurchase authorizations totaled $220 billion, a record for this early in the year, Goldman Sachs analysis of S&P 500 and Russell 3000 companies shows.
Historically, the demand increase created buy such buybacks tends to raise share prices.
Eyes On Investor Day
Meanwhile, Morgan Stanley doesn't expect Goldman to announce any new return targets at its investor day on Tuesday. Last February, Goldman Sachs raised its return on average tangible common equity (ROTCE) targets to 15% to 17%. ROTCE is an indicator of business performance and measures the rate of return on tangible common shareholders' equity.
In a research note Monday, Morgan Stanley said Goldman still has "a lot of work to do" in order to hit its existing ROTCE goal, and expects the firm to lean into its $2.5 trillion asset and wealth management business to reach its targets.
Goldman Sachs executives believe asset and wealth management growth is key to propelling the top Dow Jones stock higher, Bloomberg reported, particularly after the consumer banking segment lost $6 billion since its inception.
"It's not good to see Goldman flailing," UBS analyst Brennan Hawken told Bloomberg in an interview. "There's a perception that all the partners are not singing from the same hymn book. It leads investors to conclude the CEO might be losing confidence of the partners. And that is worrying."
GS Stock
GS stock edged up 0.5% Monday ahead of its investor day presentation. Shares are trading just below a 379.78 buy point in a cup with handle base, according to MarketSmith. Goldman Sachs stock reclaimed its 10-day moving average on Monday and is holding above its other key technical lines.
The top Dow Jones stock is up roughly 7.7% year-to-date.
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