Why Goldman Sachs Is 'Protection Against The Coming Storm'

Zinger Key Points
  • An analyst expect Goldman Sachs' strong risk management to mitigate any marekt dislocations.
  • He says the bank’s revenue growth could be boosted by tightening monetary policy

Goldman Sachs Group Inc’s GS stock could outperform other banking stocks, with a worsening economic backdrop adversely impacting the earnings of “the balance sheet lending heavy peers,” according to BofA Securities.

The Goldman Sachs Analyst: Ebrahim Poonawala upgraded the rating for Goldman Sachs from Neutral to Buy, while raising the price target from $360 to $380.

The Goldman Sachs Thesis: The bank’s revenue growth could be boosted by tightening monetary policy and a volatile geopolitical environment, as both can drive trading activity in the foreseeable future, Poonawala said in the upgrade note.

The volatility in the interest rates, forex, and commodities markets “is unlikely going away anytime soon and should serve as a tailwind for the markets business,” the analyst mentioned. “We also expect GS’s strong risk management to mitigate any material negative surprises owing to market dislocations,” he added.

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“Moreover, potential disruption across Fintech, digital assets, asset management sectors should offer Goldman with some interesting opportunities to gain market share or enter new businesses (organic or via M&A),” Poonawala further wrote.

GS Price Action: Shares of Goldman Sachs had risen by 1.39% to $303.63 at the time of publication Wednesday, according to Benzinga Pro.

Posted In: BofA SecuritiesEbrahim PoonawalaAnalyst ColorUpgradesPrice TargetAnalyst Ratings

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