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What Do Analysts Recommend for GS ahead of Its Earnings?

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Jul. 18 2016, Updated 10:56 a.m. ET

Analysts are positive about Goldman Sachs

So far in 2016, shares of Goldman Sachs (GS) have plunged by 16% and have underperformed the financial sector. The Financial Select Sector SPDR ETF (XLF) represents the US financials sector.

2Q16 earnings for the sector are expected to be dull, but analysts expect Goldman Sachs’ earnings to be higher, as the bank was hit by litigation charges last year. However, risks arising from the Brexit vote and low interest rates have taken their toll on GS’s valuations.

In a Bloomberg survey of 29 analysts on July 12, 2016, 16 analysts (55%) assigned “buy” ratings to Goldman Sachs, and 12 analysts (41%) rated it as a “hold.” The stock received one “sell” rating.

The table above lists the brokerage companies that have provided ratings and price targets for Goldman Sachs for the next 12 months. Goldman Sachs has a consensus target price of $177.33, resulting in a one-year upside potential of 12%.

Société Générale and RBC Capital Markets have assigned one-year price targets of $120 and $145, respectively, to Goldman Sachs, implying bearish return potentials of -24% and -8%, respectively, from its closing price of $156.92.

Oppenheimer & Co. and Barclays (BCS) have given GS one-year price targets of $214 and $210, respectively, the most bullish price targets for the stock. These targets imply return potentials of ~36% and 34%, respectively, over the next 12 months.

Morgan Stanley (MS), Nomura, and UBS have one-year price targets of $207, $195, and $185, respectively. These targets imply return potentials of 32%, 24%, and 18%, respectively, over the next 12 months.

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ETF exposure

Investors looking for ETF exposure to Goldman Sachs could invest in the iShares U.S. Financial Services ETF (IYG) (IYF) or XLF. IYG invests 2.9% of its portfolio in Goldman Sachs, while XLF invests 2.1%.

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