Oppenheimer Analysts Reduce Estimates for Goldman Sachs and Jefferies Due to Slow M&A Activity

o far this year, disappointing the analysts’ initial optimism. Despite expectations for increased demand following quiet M&A years in 2023 and 2024, along with stable to lower interest rates and tightened credit spreads, the M&A activity has only seen a modest 2.4% increase year-to-date, with equity capital markets up 2.7%, according to the analysts.

The uncertain economic and geopolitical landscape, including trade disruptions and fiscal policy changes, has also cast a shadow on the expected resurgence in M&A activity. These uncertainties may potentially hinder companies from engaging in significant M&A deals, contributing to the subdued outlook.

As a result, Oppenheimer analysts Chris Kotowski and Kevin Tripp have revised their estimates for financial institutions such as Goldman Sachs Group, Inc. and Jefferies Financial Group Inc. downwards. They anticipate that investment banking revenues will remain flat for the rest of 2025, a significant shift from their previous projections of growth aligned with GDP levels.

Their earlier forecasts predicted a 32% and 14% increase in investment banking revenue for Goldman Sachs and Jefferies, respectively, in 2025. However, with the current market conditions and uncertainties in play, these estimates have been reassessed. The analysts have adjusted their projections for 2026 as well, assuming a start at current levels and ending with a normalized wallet relative to GDP.

Consequently, the revised estimates indicate a 12.5% and 6.9% decrease for Goldman Sachs in 2025 and 2026, and a 20.7% and 10.5% decrease for Jefferies in the same periods. These adjustments reflect the challenging environment for financial institutions amidst the ongoing economic uncertainties.

In addition to the revisions for Goldman Sachs and Jefferies, The Carlyle Group Inc. has also been downgraded to “Perform” from “Outperform” by the analysts. The challenges in monetizing matured investments to generate capital for future operations have led to this downgrade. While the company has investments ready for monetization, the process is expected to be more complex and challenging than initially anticipated.

In conclusion, the analysts’ expectations for the financial sector in 2025 have been tempered by the current economic uncertainties and geopolitical disruptions. The lackluster M&A activity and challenges in returning capital to support future endeavors have prompted downward revisions in estimates for key financial institutions. It remains to be seen how these companies navigate the evolving landscape to sustain their operations effectively.