Deutsche Bank Upgrades Goldman Sachs (GS) to Buy

November 30, 2016 6:55 AM EST
Get Alerts GS Hot Sheet
Price: $235.74 -3.5%

Rating Summary:
    19 Buy, 14 Hold, 3 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 35 | Down: 31 | New: 11
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Deutsche Bank upgraded Goldman Sachs (NYSE: GS) from Hold to Buy with a price target of $255.00 (from $180.00). Analyst Matt O-Connor said bank stocks seem to be pricing in higher rates, but not a stronger economy.

"The BKX has risen about 15% since the election vs. a 3% rise in the S&P 500. Banks viewed as well levered to rising rates have performed the best (BAC, CFG, CMA, RF & ZION are each up 18-20%). We sense that leverage to higher rates is mostly reflected in stock prices, but that higher lending and fee volumes from a stronger economy may not be. DB’s US economist Joe LaVorgna recently raised his real GDP growth forecasts to 3% in 2017 and 3.3% in 2018," said O-Connor.

Discussing Goldman Sachs, the analyst said, "GS seems well positioned for a stronger macro environment given revenue upside, good cost control and a valuation below peers (despite similar/higher current and expected returns). A stronger economy should benefit many capital market businesses—incl advisory, equity capital markets, and both fixed and equity trading (all areas of strength at GS). This should also be a positive backdrop for investing and lending (even assuming no regulatory changes). Separately, we expect the recent rollout of consumer lending to build momentum (we est. $400m in post credit revenues in 2019). On our 2018e, GS trades at a 10% discount to peers (at 9.1x vs. 10x)."

For an analyst ratings summary and ratings history on Goldman Sachs click here. For more ratings news on Goldman Sachs click here.

Shares of Goldman Sachs closed at $211.75 yesterday.

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