Below is a Special Report from Wall Street’s Top analysts upgrades, downgrades and initiations for Morgan and Goldie as follows:
Last year at this time Goldman Sachs Group (NYSE:GS) was at the top of the DJIA, making an impressive rally since Y 2016’s surprising Brexit vote.
However, the Big Wall Street IB (investment bank) has slowed way down since that time and currently resides in the bottom 3rd of the DJIA in Y 2017.
If you are looking to play the big investment houses, one analyst sees much more value now in Morgan Stanley (NYSE:MS) than Goldman.
Instinet’s Steven Chubak has a Neutral rating for Goldman Sachs, but lowered its price target to 225 from 230, implying a Southside of 5.5% from Tuesday’s close of 238.02.
He detailed in the report: “Following post-election euphoria, investor sentiment has turned more negative on Goldman Sachs, as franchise concerns (particularly on FICC) have overwhelmed deregulation hopes. In addition, many investors were dismissive of Goldman Sachs’ recently announced $5bn revenue growth plan, prompting us to conduct a deeper dive into revenue targets / lending opportunity. While we were hoping our findings would support a more constructive (and arguably contrarian) view on Goldman Sachs’ shares, there remain three key factors that keep us on the sidelines.”
- Delayed Gratification: Investment Banking (IB), lending targets (50% of $5-B) credible but EPS more back-end loaded, as both higher reserving for future loan growth at Marcus (its consumer lending platform) and delayed IB productivity (we est. 12-18 months) could limit EPS benefit in 2018-19.
- Secular Headwinds: Trends indicate greater risk to Investment Management Division (IMD), trading targets (50% of $5-B), as these segments face both structural headwinds and declining fee pools.
- Negative Mix Shift: Goldman Sach’s lending initiative increases exposure to a lower multiple business, with comps trading at 10x Vs 12x for Goldman Sachs.
Instinet prefers Morgan Stanley to Goldman Sachs.
While investors have argued that the Morgan Stanley and Goldman Sachs pair has run its course, about 70% alpha since Y 2012, Instinet believes that there is further upside based on policy tailwinds and the potential for more deregulation. The firm’s analysis suggests that Morgan Stanley’s business mix justifies a 10% multiple premium over Goldman Sachs, and about 20% alpha potential in the pair.
Shares of Goldman Sachs finished Tuesday at 238.02, with a consensus analyst price target of 249.44 and a 52-wk trading range of 209.37 – 255.15.
Shares of Morgan Stanley finished at 49.38 Tuesday. The stock has a 52-wk trading range of 39.97 to 51.52 and a consensus analyst price target of 52.42.
|HeffX-LTN Analysis for GS:||Overall||Short||Intermediate||Long|
|Neutral (0.10)||Bearish (-0.31)||Neutral (0.10)||Very Bullish (0.50)|
|HeffX-LTN Analysis for MS:||Overall||Short||Intermediate||Long|
|Neutral (0.24)||Neutral (-0.02)||Bullish (0.33)||Bullish (0.39)|
Have a Happy Thanksgiving.