JPMorgan downgrades Goldman Sachs stock rating to Neutral on valuation

Investing.com - JPMorgan downgraded Goldman Sachs (NYSE:GS) from Overweight to Neutral on Tuesday, while raising its price target to $750.00 from $625.00. The stock, currently trading at $763.32, has delivered an impressive 51.3% return over the past six months.

The investment bank cited fair valuation as the primary reason for the downgrade, noting that Goldman Sachs has demonstrated strong market share improvement in its Sales and Trading business over recent years. With a market capitalization of $241.6 billion and a P/E ratio of 16.86, InvestingPro analysis suggests the stock is currently trading near its Fair Value.

JPMorgan acknowledged that Goldman has successfully refocused its franchise on its strengths in Global Banking and Markets as well as Asset and Wealth Management, with Platform Solutions now mainly consisting of the Apple Card and Transaction Banking business.

The research firm estimates that Platform Solutions will contribute approximately 5% to Goldman’s Group Revenues in 2025, limiting its impact on overall performance.

Despite the downgrade, JPMorgan recognized the more durable nature of Goldman’s revenue streams, while expressing a preference for European investment banks Barclays and Deutsche Bank at "significantly cheaper valuations" and maintaining its preference for Goldman over Morgan Stanley in the U.S. market.

In other recent news, Goldman Sachs reported strong third-quarter results, with earnings per share reaching $12.25, marking a 46% increase year-over-year and a 12% rise quarter-over-quarter. This performance exceeded market expectations by 11.1%, prompting Freedom Capital Markets to upgrade its rating on the company from Sell to Hold and raise the price target to $794.00. Meanwhile, Keefe, Bruyette & Woods adjusted their price target for Goldman Sachs to $870, citing a favorable revenue environment and a solid revenue beat. In contrast, Morgan Stanley lowered its price target to $828, reflecting revised earnings per share expectations for the coming years.

Additionally, Goldman Sachs is expanding its infrastructure financing operations to capitalize on the growing artificial intelligence sector. This initiative involves forming a new team within its global banking and markets division to focus on global infrastructure financing. In another development, Lotfi Karoui, the chief credit strategist, is departing Goldman Sachs after 18 years with the firm. Karoui held the position since 2017 and was among the executives promoted to partnership status in November. These developments highlight the dynamic changes and strategic moves within Goldman Sachs.

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