Goldman Sachs: Reducing Fair Value Estimate as We Forecast Lower Revenue Growth and Margins

We are decreasing our fair value estimate for narrow-moat-rated Goldman Sachs to $368 from $410 per share. This is about 12.5 times forward earnings and 1.3 times tangible book value. Earnings since our previous valuation update were more than offset by a lowering of our forecast growth for net interest income and lower operating margins. Our base case has net revenue growing at a compound annual growth rate of around 1% over the next five years, operating margins of 37.5%, and returns on tangible common equity of around 12.5%. The company has an operating margin goal of around 40% and return on tangible common equity goal of 15% to 17%.