03/28/2008 02:45 am ET | Updated May 25, 2011

Does Goldman Deserve Its Golden Status?

Goldman Sachs (GS) continues to be the favorite investment bank for many, but market instability and its premium valuation has analysts debating its prospects for the future.

The firm beat expectations with earnings per share [EPS] of $7.01, or net income of $3.22-billion in the fourth quarter, wrapping up what was a record year. However, it said it was cautious about the market in the near-term.

UBS analyst Glenn Schorr thinks that while Goldman is not immune to the lower earnings environment, it is still in the best position to weather tough times and produce healthy returns. He pointed to its expertise as a distressed investor, strong risk management, an expanding franchise, and its variety of principal investments.

Goldman should generate "pretty healthy" book growth, and a "best-in-class" return on equity given its business mix and geographic footprint, Mr. Schorr told clients in a note.

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