Analysts will likely boost Goldman Sachs' price target

Banking giant Goldman Sachs wasn't expected to wow investors with its first-quarter results. 

But the results were strong enough to cheer Wall Street on an otherwise dreary day for stocks. 

The S&P 500 opened the day with a strong open, with the index jumping more than 26 points immediately. Twenty minutes later, the index was at 5,168.43.

And then the market slumped, with the S&P 500 falling 1.2%, its third down day in the last four.  

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Goldman Sachs, meanwhile, opened up 17.5 points from Friday's close of $389.49 and topped out at $412.86 before ending the day at $400,88, up 2.9%.

Not the biggest gain ever, but, by itself, Goldman's gain was worth 74 points to the Dow Jones Industrial Average. And the Dow fell 248 points to 37,735.  

If Goldman had just been flat on the day, the blue-chip index would have lost 322 points.

But the financial giant, the fifth-biggest U.S. bank, reported a 28% increase in quarterly profit as its efforts to shed non-core businesses began to pay off and the deal market, Goldman's bread and butter, showed signs of life.

The company reported $11.58 a share in earnings, up from $8.79 a share a year ago. The consensus estimate was for a decline in earnings to $8.59 a share.  

Revenue totalled $14.2 billion, up 16% from a year earlier. Net income was $4.1 billion, up 28% from last year. 

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Analysts see more gains for the stock

At least one Wall Street firm boosted its price target after the report.

CFRA believes the stock will hit $450 in the next 12 months. Its old price target was $420. That's a relatively modest increase.

Other analysts have been boosting targets more aggressively in the last week. JMP Securities analyst Devin Ryan raised his target to $460 a week ago. 

David Konrad at Keefe, Bruyette & Woods bumped his target to $485 on April 5. 

Banks have so far reported decent profits. But the skittishness about inflation and interest rates hit financial stocks last week. 

JP Morgan Chase  (JPM)  fell 6.5% on Friday and was flat Monday at $182.89. Morgan Stanley  (MS) fell 8.4% between April 9 and April 12 to $86.19. It was up 0.9% Monday to $86.99. 

The Financial Select Sector SPDR exchange-traded fund  (XLF)  dropped 6.5% between April 9 and Monday.  

Goldman Sachs wasn't spared, either. It fell 5.1% last week in part because the market was crummy. And, of course, investors weren't expecting much from Goldman's earnings.  

Then came Monday's report.

Why profits jumped

Goldman's results improved because it had shed businesses that weren't working, like its consumer lending business, and GreenSky, a home-improvement lender and its related loan portfolio. 

Instead, Goldman Sachs has gone back to focusing on its core businesses: Investment banking, trading and wealth management. 

And just about all those businesses had big quarters. And they should have big years, especially its giant Global Banking &  Markets group, analysts said.

Investment banking fees totalled $2 billion in the quarter, up 32% from a year earlier.

That's just the start, CEO David Solomon said on the company's earnings call. Capital markets are opening up all around the world.

Goldman's trading operations may have a really big year because of volatile interest rates and markets, added UBS analyst Brennan Hawken. 

Volatility drives trading volume, he told Yahoo Finance. Goldman will be a winner in that business. 

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