Nomura Securities Upgrades Goldman Sachs (GS) to Buy, Downgrades JP Morgan (JPM) to Neutral

(Updated - January 25, 2016 8:34 AM EST)

Nomura Securities upgraded Goldman Sachs (NYSE: GS) from Neutral to Buy with a price target of $210 (from $207), while downgrading JP Morgan (NYSE: JPM) from Buy to Neutral with a price target of $71 (from $70).

Analyst Steven Chubak commented, "We are upgrading GS as we see a better risk / reward skew vs. JPM. For GS, a number of legacy issues had kept us on the sidelines: Heavier FICC / I&L gearing, higher CCAR-driven capital requirements, and greater ROE downside from regulatory threats (e.g., G-SIB surcharges in CCAR, tougher Market Risk rules). However, GS’ efforts to adapt have resulted in an improved revenue profile (FICC / I&L only ~37% of revenues), a leading excess capital position, and significantly higher CCAR ratios (B3 CET1 up +290bps vs. 3Q14)."

For JPM, the decision to downgrade is not taken lightly, as 4Q earnings / 2016 guidance surprised positively. However, as we evaluate potential sources of risk, we see comparable downside for JPM and GS, with greater upside potential at GS. We also believe the market environment is not conducive to applying a lower COE to JPM, which could close the valuation gap. GS TP to $210 (+34% upside, from $207); JPM TP to $71 (+25% upside, from $70)."

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 $156.86 yesterday.

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