Goldman Sachs shares gain the most in 2 1/2 weeks on Thursday, group acquires United Capital in $750 million all-cash deal

May 17, 2019 10:10 am

Goldman Sachs Group Inc (GS) said on Thursday it had agreed to acquire United Capital Financial Partners Inc in an all-cash deal valued at $750 million.

The purchase is to expand the Wall Street bank’s wealth management business, which encompasses Private Wealth Management and Ayco, and supervises almost $500 billion of clients’ assets.

The acquisition will help Goldman Sachs cover a wide range of customers in Ayco’s expanding corporate client base by utilizing United Capital’s advisor-led, tech-enabled platform with considerable scale and geographic footprint, the bank said.

Goldman Sachs shares closed higher for a third consecutive trading session in New York on Thursday. It has also been the sharpest daily surge since April 29th. The stock went up 1.40% ($2.74) to $199.14, after touching an intraday high at $200.01, or a price level not seen since May 10th ($202.10).

Shares of Goldman Sachs Group Inc have risen 19.21% so far in 2019 compared with a 14.74% gain for the benchmark index, S&P 500 (SPX).

In 2018, Goldman Sachs Group’s stock went down 34.43%, thus, it underperformed the S&P 500, which registered a 6.24% loss.

“We have a leading wealth management franchise, driven by our preeminent Private Wealth Management and Ayco offerings, which will serve as a cornerstone of our business as we execute on our long-term strategy to offer clients solutions across the wealth spectrum,” David Solomon, Goldman’s Chairman and Chief Executive Officer, said in a statement.

“United Capital will help accelerate this strategy by broadening our reach, allowing more clients to access the intellectual capital and investment capabilities of Goldman Sachs,” Solomon added.

Headquartered in California, United Capital has over 220 financial advisers located in 90 offices across the United States and manages nearly $25 billion of customers’ assets. The firm also operates FinLife CX, a digital platform, which enables independent advisors to expand their business and establish stronger relationships with customers.

The acquisition is to be finalized during the third quarter of 2019, subject to customary regulatory approvals.

As part of the deal, United Capital’s founder and CEO, Joe Duran, is to join Goldman Sachs, the Wall Street bank said.

According to CNN Money, the 24 analysts, offering 12-month forecasts regarding Goldman Sachs’s stock price, have a median target of $222.50, with a high estimate of $312.00 and a low estimate of $170.00. The median estimate represents an 11.73% upside compared to the closing price of $199.14 on May 16th.

The same media also reported that 14 out of 29 surveyed investment analysts had rated Goldman Sachs’s stock as “Hold”, while 10 – as “Buy”. On the other hand, 3 analysts had recommended selling the stock.

Weekly Pivot Levels

By using the traditional method of calculation, the weekly levels of importance for Goldman Sachs Group Inc (GS) are presented as follows:

Central Pivot Point – $202.31
R1 – $206.72
R2 – $211.38
R3 – $215.79
R4 – $220.19

S1 – $197.65
S2 – $193.24
S3 – $188.58
S4 – $183.91

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