KBW upgrades Goldman Sachs, sees 40% rally in the stock
rtsuggests
October 7, 2022
Business
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Goldman Sachs is a buying opportunity that can jump 40% from here, according to Keefe, Bruyette & Woods. Analyst David Konrad upgraded shares of Goldman Sachs to outperform from market perform, saying that the the firm’s valuation based on tangible book value (TBV) looks attractive. “We are upgrading Goldman Sachs to Outperform from Market Perform due to an attractive valuation of just under forward TBV, strong TBV growth, improved capital allocation and potential near-term benefits of strong FICC results over what could be a volatile next few quarters,” Konrad wrote. Goldman Sachs has come under pressure this year — with shares down 20.4% — as the firm contended with growing concern over a recession and a dearth of investment banking. Still, the analyst said he specifically approves of the bank’s efforts to move private equity assets over to a third party, will help reduce revenue volatility for Goldman Sachs, while also growing its alternatives asset business. “We believe the shift in business mix will result in more visible earnings and a higher valuation,” read the note. Other near-term catalysts cited include better TBV growth than peers, efficient use of capital, a better deposit mix as Goldman Sachs manages more corporate treasurys, and the likelihood of better fixed income, currencies and commodities trading revenue due to market volatility. KBW raised its price target on the stock to $429 from $395. The new price target is 40.8% above where shares closed Thursday at $304.67. The stock is up 0.4% in Friday premarket trading. —CNBC’s Michael Bloom contributed to this report.
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