Analyst at Citigroup gives an unpopular rating to Goldman Sachs and lowers its target price
Published By: Angela Campbell on January 10, 2017 11:44 am EST
The banking sector has enjoyed a terrific run since the end of last year. Election day and December FOMC meeting were quite a boost for the financial sector. However, Goldman Sachs (NYSE:GS) stock is downgraded at Citigroup (C) with a lowered target price.
Interestingly, several analysts do believe that the banking rally is pre-mature and may not have further upside despite the upcoming Trump era and higher interest rates. Keith Horowitz at Citigroup downgraded the stock from a Neutral to a Sell. He lowered the target price at $225 with a downside potential of 6% from the current level.
Goldman Sachs trades lower in the pre-market hours by almost a percentage point. The stock closed at $242.89 on Monday. The stock gained more than 60% in market value in the past six months, almost since the Brexit.
Mr. Horowitz writes in the note that the risk/reward form the US bank stocks is not very compelling following the recent rally. The higher interest rates have improved the fixed income trading revenue but uncertainty level is still relatively higher. Fixed income trading revenue has increased in the past two quarters for almost all major banks.
Mr. Horowitz is not skeptical to the banking sector as he kept Buy ratings for Bank of America (BAC) and Wells Fargo (WFC) stocks. Both banks have significantly enjoyed the bull run in the past couple of months. Majority of the analysts suggest a Buy on Goldman Sachs as higher rates, rolled back regulations, lower corporate taxes remain tailwinds for banks.
Recently, analyst at UBC, Brennan Hawken, reiterated his Buy rating on Goldman Sachs. He raised the target price from $234 to $285 as he believes that the earnings will improve and Goldman Sachs may take over much of the market share in terms of total industry revenue. The upside potential for the stock is more than 18% at the current market value.