Goldman Sachs Group Inc (NYSE:GS) has outperformed the market pretty solidly this year, up 38% for 2013, and investors are probably wondering whether the investment bank can continue to outperform or if now is a good time to cash out.

Goldman Sachs ROE

“A recovering US economy, buoyant US equity markets, strong ECM and DCM calendars, and a rebounding US M&A market are providing a tailwind for the firm,” writes Bernstein Research senior analyst Brad Hintz in a report titled ‘Goldman Sachs: What If The Black Box Really Works?’.

Goldman Sachs rates as market outperform

Hintz rates Goldman Sachs Group Inc (NYSE:GS) as a Buy and market outperform with a base case price target of $190 (current price $177), but he also thinks there is a lot of upside. Specifically he mentions the possibility of a return to peak ECM, return to peak M&A, return to peak sales and trading, return to peak investment revenue, reduction of Goldman Sachs compensation ratio from 37.9% to 36%, and all five “combined into a utopian environment.”

Goldman Sachs Group Inc (NYSE:GS) is the market leader in mergers and acquisitions, a close second behind Morgan Stanley (NYSE:MS) in underwriting IPOs, a top ten underwriter in capital debt markets, and the world’s largest investment bank across the board, so it stands to gain a lot from the continuing global recovery. Hintz figures that if everything goes right, Goldman’s stock price could go as high as $232 next year.

No need for the bear case?

By now it’s almost not surprising, but Hintz doesn’t really get into the bear case, and is more interested in best possible outcomes than possible headwinds. He warns investors that the main thing to watch out for is too much growth too soon, and he advises that “at valuations above 1.45x tangible book, investors should consider taking gains.”

Other analysts broadly agree that Goldman Sachs Group Inc (NYSE:GS) still has a lot of room for growth, but it’s still jarring to read a detailed description of ‘utopia’ with a passing mention of the risks that exist. Goldman Sachs has been getting out of capital intensive businesses (some of which were high margin) in preparation for implementation of the Volcker Rule, but even well-positioned, its activities will be more constrained than in the past, making historical price-to-book comparisons difficult. And just as it will reap the rewards of a surging economy, if tapering causes the market to stumble, Goldman Sachs has just as much to lose.