Has Goldman Sachs weathered its 'perfect storm'?

Goldman Sachs' second quarter figures on 20 July were a shock to the system for the financial sector.

The banking group revealed earnings had fallen 82% to $613 million in the second quarter, knocking 78 cents off the share price and reverberating around global markets.

Goldmans had been trading at $4.93 a year ago, but the results took it well below analyst expectations for the share price of $2.08, to $1.45 per share, but is the the worst now over for the investment banking giant?

Brokers certainly seem to think so.

Bank of America Merrill Lynch described the second quarter of 2010 as Goldmans' 'perfect storm' after it faced headwinds from a UK bonus tax, SEC fines and a difficult trading environment.

It believes Goldmans is through the worst. 'We think better days lie ahead for the firm, though [third quarter] may remain sluggish seasonally.

Deutsche Bank is another with enough conviction in the bank's growth potential to maintain its buy rating.

In its note Deutsche said: 'Despite the weak quarter and near term headwinds, given the recent SEC settlement, Goldman Sachs relative positioning, and attractive valuation, we continue to like the longer term risk/reward & maintain our Buy.'

It noted that the bank had seen strong performance in its advisory arm and had increased its teir one ratio to a healthy looking 15.2%, from 15% in the first quarter of 2010.

But it highlighted 'sluggish book value growth' and an annual long term asset management decay of 5% on the downside, as well as a depressed return on equity (ROE) of 7.9%

BarCap maintains a neutral weighting on the firm although it has concerns over revenue shortfalls, particularly from its equities trading.

'The most striking shortfall on the revenue line was equities trading, which registered the lowest quarterly figure at least back to 2003 in our model,' it said.