Goldman Sachs (GS) could be an intriguing choice for investors, according to Wall Street analysts’ ratings. Analysts covering the stock are expecting a double-digit upside in its stock price.
Of the 26 analysts covering Goldman Sachs (GS) stock, 14 recommended a “strong buy” or “buy,” 11 recommended a “hold,” and one recommended a “sell.” With Wall Street’s one-year forward price target of $276.23, GS stock has an upside of 16.2% from its current market price of $237.81.
What’s driving this optimism?
The optimism surrounding Goldman Sachs (GS) stock can be attributable to its back-to-back quarters of strong results. The company’s revenues and earnings per share have topped Wall Street estimates in the trailing five quarters. These metrics also marked significant YoY (year-over-year) improvement.
Goldman Sachs reported its second-quarter results on July 17 and reported EPS of $5.98. Goldman Sachs’ EPS surpassed the Wall Street estimate of $4.66 and marked significant growth of ~51.0%. Its revenues of $9.4 billion grew 19.2% and beat the analyst forecast of $8.74 billion.
The Federal Reserve’s hawkish monetary policy is expected to support Goldman Sachs’ bottom-line results. The central bank has raised interest rates twice in the first half of the year. It intends to increase rates twice in the second half and three times in 2019. In the second quarter, Goldman Sachs’ net interest margin improved ten basis points YoY to 0.5%.
Strong economic growth, a healthy job market, tax cuts, and easing regulations are creating a relatively smooth business environment for Goldman Sachs. The US GDP grew 4.1% in the second quarter.
Peers’ ratings and target prices
Analysts are bullish about Goldman Sachs’ peers Citigroup (C), Morgan Stanley (MS), and Bank of America (BAC), which received “buy” ratings from the majority of analysts tracing their respective stocks.
The one-year target prices for Citigroup, Morgan Stanley, and Bank of America signify upsides of 17.2%, 22.7%, and 11.8%, respectively, from their current market prices. Goldman Sachs comprises ~10.8% of the iShares US Broker-Dealers & Securities Exchanges ETF (IAI).
In this series, we’ll look at Goldman Sachs’ valuations, fundamentals, and macro drivers, all of which could push its stock higher.