Goldman Sachs Group Inc (NYSE: GS) down nearly 12% versus its year-to-date high is an opportunity for investors to build a position in this quality name, as per a UBS analyst.
Goldman Sachs stock should be worth $385
On Wednesday, Brennan Hawken upgraded the financial services behemoth to “buy” and raised his price target to $385 – about a 17% upside from here.
The analyst is constructive on Goldman Sachs stock because he’s convinced that its trading business could benefit from the recent bank failures.
GS has opportunity to accelerate growth of their asset and wealth management platform and their transactional banking business through attractively priced M&A, especially if stress in banking system presents further inorganic opportunities.
In January, Goldman Sachs said its trading revenue went up 16% (best among peers) in 2022 that helped offset a big hit to its revenue from investment banking.
Why else is he bullish on Goldman Sachs stock?
Earlier this year, Goldman Sachs confirmed that it was shrinking its loss-producing consumer business (read more). That could be a meaningful tailwind for the share price as well, Hawken added.
Other reasons cited for the bullish view on Goldman Sachs stock include the bank’s commitment to expanding its financing business. The analyst said in his research note:
As a [global systemically important bank], the firm is already subject to the highest capital requirements. So, while Basel 4 certainly could increase capital requirements, changes should be less significant than for regional banks.
Goldman Sachs is set to report its Q1 financial results next week. Consensus is for it to earn $8.53 a share this quarter versus $10.76 per share a year ago.
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