Goldman Sachs Takes Action On 6 Capital Markets Names, Upgrades 3 (STT) (CBOE) (APO), Downgrades 2 (APAM) (BLK), Removes 1 (AMG) From Conviction Buy List
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Rating Summary:
9 Buy, 13 Hold, 3 Sell
Rating Trend: Up
Today's Overall Ratings:
Up: 13 | Down: 11 | New: 11
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Wednesday morning Goldman analyst Alex Blostein re-rated six names. Actions and summary of viewpoint are as follows:
State Street (NYSE: STT) upgraded from Neutral to Buy:
"We upgrade STT to BUY on better outlook for NIR, FX trading and sec lending (33% of revenues) and margin upside from Project Beacon and recent GE AM acquisition. We are ~10% above cons EPS for 2017/2018"
CBOE (NASDAQ: CBOE) upgraded from Sell to Buy, PT to $63 from $83:
"We up CBOE to Buy from Sell as synergies from the BATS acquisition, a more favorable revenue backdrop, and potential tax rate benefits create big upward bias to EPS estimates, trumping high valuation. Overall, we see over 30% potential EPS accretion to our 2018 estimates (over 40% with lower tax rates)."
Apollo Global Management (NYSE: APO) upgraded from Neutral to Buy, PT raised from $20 to $24:
"We expect APO's distributable earnings to inflect in 2017 (+30% in 2017/18) amid growth in fee‐related earnings and a step‐up in realized incentive fees as Fund VIII begins to harvests. We also expect APO's earnings profile to be more stable relative to peers with FRE contributing ~60%, deserving a higher multiple."
Artisan Partners (NASDAQ: APAM) downgraded from Neutral to Sell, PT cut from $29 to $26:
"We expect APAM’s outflows to accelerate amid significant underperformance in its largest strategy (25% of AuM). We are ~9% below consensus EPS for 2017/2018"
Blackrock (NYSE: BLK) downgraded from Buy to Neutral, PT cut from $410 to $403:
“We still view BLK as a structural winner with best‐in‐class organic growth prospects. But rising top‐line risks from a negative AUM mix shift leaves us slightly below cons EPS, while premium P/E already reflects superior growth profile"
Affiliated Manager Group (NYSE: AMG) removed from Conviction Buy List, remains Buy rated, maintains $190 PT:
"We still see AMG as the best risk/reward in the space and see significant absolute upside to the stock. That said, near‐term softer retail flows likely take the "re‐rating" catalyst off the table for time being. We remain at Buy"
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