Goldman Sachs Group Inc (NYSE:GS, ETR:GOS) has been downgraded to ‘Neutral’ from ‘Buy’ by analysts at UBS who see limited upside to its current valuation.
On the other hand, they boosted their price target to US$610 from $600.
Shares of Goldman Sachs traded just shy of $590 in the early afternoon on Monday.
UBS analysts see the firm as “a strong, well-positioned franchise with a valuation to match.”
“The firm has taken meaningful steps to improve revenue durability and grow in higher-multiple segments, but most of the earnings still leans heavily on Global Banking and Markets (GMB), approximately 65% of revenues,” they wrote. “With limited catalysts for further re-rating, we believe the current valuation reflects limited upside.”
The analysts do not see the Asset and Wealth Management (AWM) segement growing enough to offset the dominance of GBM and become a major earnings driver in the near term.
“It currently contributes less than a third of net revenue, consumes substantial capital and remains too small to offset GBM's influence,” they wrote.
“Without transformative M&A, AWM's timeline for creating material impact to firm-wide growth remain extended.”
UBS raised its 2025 and 2026 estimates by 11% and 14%, respectively, due to an improving market environment.
“We believe the firm's strategic initiatives should result in a more durable earnings profile,” the analysts concluded.