Published - October 17, 2022 @ 3:23 PM (EET)

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In just four years as chief executive, David Solomon is venturing into his third major reorganization to generate sustainable fees in any environment, undoing some of the signature moves he made as recently as 2020.

Goldman Sachs (NYSE:GS), which is expected to announce the changes on October 18, plans to combine its biggest businesses into three divisions, with its storied investment banking and trading businesses merged into a single unit and asset and wealth management consolidated into another.

According to the report published by the Wall Street Journal, the third division will house the bank's portfolio of financial-technology platforms, including its ventures with Apple (NASDAQ:AAPL), General Motors (NYSE:GM), and GreenSky, the installment-lending firm it bought last year.

WHY IT MATTERS

The reorganization reflects the firm's struggle to overcome skepticism, from investors and even some of its executives, over its ambitions for consumer banking and talks of other fee-based businesses to win over shareholders.

Excess cost and missed profitability goals have recently set off a rising tide of discontent inside the firm, leading to a reorienting of those operations and the latest group revamp.

In recent years, Goldman's shares have struggled to keep pace with rivals and have sought to narrow the gap by strengthening the businesses that command higher valuations on Wall Street.

NOW WHAT

While it is still unclear how the reorganization will shake up Goldman's leadership team, the financial services giant may announce further details during its Q3 earnings call, scheduled before the markets open Tuesday.

Third-quarter results are expected to show a 16% decline in revenue from a year ago, while analysts anticipate full-year profits to slide by more than 40% amid a drop in deals and macro headwinds that could hurt its financials.

PRICE TARGET:  Based on 13 analyst ratings tracked by TipRanks, Goldman's stock is a Moderate Buy (8 Buys, 3 Hold, 2 Sell).  The average price target of $392.42 implies an upside potential of 30.81%.