Goldman Sachs Group Inc (GS)

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Goldman Shares Rise After UBS Upgrade Amid 'Solid Results'
By: TheStreet | September 24, 2020

• “Goldman is generating solid results in the current environment," says UBS analyst Brennan Hawken, who upgraded the investment bank to buy.

Goldman Sachs (GS) shares rose on Thursday after UBS analyst Brennan Hawken upgraded the investment bank to buy from neutral and raised his share-price target to $245 from $220.

“Goldman is generating solid results in the current environment, which has sustained in the third quarter, and potential volatility from the upcoming U.S. election could allow for a solid fourth quarter, bridging investors to first-quarter seasonal strength,” Hawken wrote in a commentary.

Shares of the New York bank recently traded at $187.54, up 0.8%. The stock had fallen 19% this year through Wednesday.

The minuscule interest rates implemented by the Federal Reserve in response to the coronavirus pandemic have taken their toll on the entire banking industry.

Still, “M&A announcements are beginning to pick up, underwriting results have been very robust, and trading volume and investor engagement has remained elevated, which plays to Goldman's traditional strengths,” Hawken said.

“As some of these revenues recover (while trading normalizes), Goldman's efficiency efforts should limit expense growth, driving up [return on tangible equity].. … We see a path to 12%-plus ROTE, yet GS is trading below [tangible book value].”

Next year, “we expect the efficiency efforts from GS's strategic plans to begin to impact the profit and loss, driving down the efficiency ratio, leading to upside to earnings forecasts,” Hawken said.

Currently, 18 Wall Street analysts have buy ratings on Goldman and 8 have hold ratings, according to Bloomberg.

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