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A markup of

Goldman Sachs'

(GS) - Get Goldman Sachs Group, Inc. Report

investment in Sumitomo Mitsui Financial will probably cause the investment bank to beat existing analyst estimates in the third quarter, Merrill Lynch said in a research note Monday.

The brokerage also said

Lehman Brothers


will benefit from an orderly wind-down of the summer's bond market volatility.

Merrill raised its estimate of Goldman's third-quarter earnings to $1.35 from $1.22 a share and raised its estimate of Lehman's to $1.32 from $1.23 a share. Currently, analysts surveyed by Thomson First Call expect Goldman to earn $1.17 a share in the third quarter and Lehman to earn $1.26 a share.

Merrill didn't change its earnings estimates on

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"Post-Labor Day, it is critical that equities and M&A resume pre-August deal momentum in order to maintain or build on the group's stock performance," Merrill wrote. "This is particularly true in light of the typical fourth-quarter downturn in trading, given that debt markets have been so supportive of earnings."

Merrill premised a previous bullish report on expectations of growth in equity issuance and trading and the possibility of robust junk-bond issuance.

"Overall, while industry activity levels exhibited the normal seasonal downturn at the end of August, we believe the drop-off in issuance and trading was well within the bounds of our previous estimates," Merrill said in its report Monday. "Given the generally benign nature of the August slowdown -- in addition to the improved behavior of the bond market and a resilient equity market tone -- we have found no reason to trim estimates on the event of

third-quarter earnings announcements."