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Goldman Sachs Group Inc. stock on Thursday moved into positive territory for the first time since February, as Wall Street bought into the idea that better times await the marquee investment bank.
With the prospect of higher interest rates, a slowing economy and a lack of capital-raising and mergers and acquisitions activity hanging over the banking sector, Goldman Sachs
GS,
stock has not been in the black for 2023 since February. The regional bank crisis in March and April also weighed on the sector.
The stock was up 2.9% on Thursday and up 2% so far in 2023. Goldman Sachs is a component of the Dow Jones Industrial Average
DJIA,
which is up 6.5% in 2023.
While its second-quarter earnings missed estimates on Wednesday, the bank managed to beat revenue projections, while it forecast a potential uptick in deal-making.
JPM Securities analyst Devin Ryan reiterated an outperform rating on Goldman Sachs and said the bank’s business benefitted from stronger-than-expected revenue in global markets as it absorbed a number of one-time items related to the exit of its consumer banking business and a less capital-intensive approach in its asset and wealth management unit.
“Overall, we were bracing for a messy quarter, and while these items (which we do
not expect to occur every quarter) impacted results more than we had modeled,
core results (ex. items) were generally in line to even a bit better than we were
expecting, and we believe the outlook should improve from here,” Ryan said in a research note.
BMO analyst James Fotheringham raised his target price on Goldman Sachs stock to $411 a share from $407 and said reiterated an outperform rating on the company, but cautioned its through-the-cycle business targets appear to be ambitious.
“However, we like the setup for the stock given relatively low expectations in tandem with improving capital markets momentum (‘green shoots’),” Fotheringham said.
UBS analyst Brennan Hawken reiterated a buy rating on Goldman Sachs, saying Goldman’s investment banking results reflect a challenging environment.
“We believe the firm’s strategic initiatives should result in a more durable earnings profile and a valuation in line with its long-term average,” Hawken said.
Also read: Goldman Sachs CEO David Solomon to bring ally Tom Montag on board
