Goldman Sachs Group Inc (NYSE: GS) has been in a downtrend over the past two months but a KBW analyst says the next twelve months will likely look very different.
Goldman Sachs stock should be worth $429
On Friday, David Konrad recommended that investors buy Goldman Sachs stock as it has upside to $429 – close to a 45% upside from here.
“GS” is currently trading just under its forward tangible book value, which, as per the analyst, makes this stock attractive in terms of valuation. He added:
A main driver of the stock will likely be the excess capital generated from harvesting on-balance sheet private equity assets while simultaneously growing its alternatives asset management business.
Improved capital allocation was among other reasons cited for the constructive view. Konrad does see “FICC” as a near-term catalyst for the stock as well.
Jim Lebenthal agrees with the bullish call
Goldman Sachs is expected to report its financial results for the third quarter on October 21st. Consensus is for it to earn $7.53 a share versus the year-ago $14.93 a share.
Agreeing to the “outperform” rating on CNBC’s “Halftime Report”, Cerity Partners’ Jim Lebenthal (who owns the stock) said:
You’ve got a stock here with pretty sizable cash flow and earnings. They’ve dampened buyback since last Fed Stress Test, but they’ll be buying back shares this year and next. This is a high return on equity stock. It’s very easy to own it here.
The U.S. Fed has already signalled plans of raising rates to about 4.6% (link). That’s also a tailwind for the investment bank. Goldman Sachs stock is trading roughly 25% down for the year at the time of writing.
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