Citi Upgrades Goldman Sachs (GS) to Buy

(Updated - October 12, 2015 11:12 AM EDT)

Citi upgraded Goldman Sachs (NYSE: GS) from Neutral to Buy with a price target of $210. Analyst Keith Horowitz noted positive risk/reward given recent underperformance and he called Goldman Sachs a cheap call option on improving capital market. He also thinks the bank has an opportunity to gain share in Europe.

Horowitz explained, "While factoring in lower rates will weigh on the banks, things can change very quickly on the capital markets outlook. While we believe with a very high degree of certainty that the banks estimates are too high, GS is the only name we cover where we see a potential path for positive EPS revisions for 2016 and think you want to buy the stock when return expectations are low as they are today and the stock is pricing in longer term returns just slightly above their cost of capital."

The analyst added, "Banks continue to adjust to new regulations, re-considering which businesses they should be in and exiting businesses that do not earn their cost of capital under the new rules. We think as banks continue to adjust GS could take market share, particularly in Europe, where GS has a solid presence (25% of revenues are from the Europe, Middle East, and Africa region) and European banks still have work to do to on the capital front."

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 $179.19 yesterday.

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