On Tuesday, Oppenheimer adjusted its outlook on Goldman Sachs (NYSE:GS), increasing the investment bank's stock price target to $517 from the previous $479, while keeping an Outperform rating on the stock. The revised price target reflects an 11.3 times multiple of the firm's estimated earnings per share (EPS) for the year 2025, which is projected to be $45.82.
The methodology behind setting the new price target involves comparing the bank's valuation to broader market metrics. Specifically, the S&P 500's next twelve months (NTM) equal weighted market multiple is 16.1 times, and banks typically trade at 70 to 80 percent of this market multiple. For Goldman Sachs, Oppenheimer has applied a 70 percent relative multiple to arrive at the new target.
The stock price target uplift comes as Oppenheimer's analysis suggests a positive long-term outlook for Goldman Sachs, based on the bank's expected performance and its relation to general market valuations. The Outperform rating indicates that the analyst firm believes Goldman Sachs shares will likely do better than the overall stock market in the next 12 to 18 months.
The new stock price target of $517 implies a significant potential upside from the previous target of $479, signaling Oppenheimer's confidence in the financial institution's growth prospects. The use of the 2025 EPS estimate in calculating the price target also demonstrates a forward-looking approach in evaluating the bank's value.
Goldman Sachs, as a major player in the financial sector, is closely watched by investors, and changes in analysts' expectations can influence market perceptions and investment decisions. The updated price target by Oppenheimer is therefore an important piece of information for the market participants tracking Goldman Sachs' stock performance.
InvestingPro Insights
Goldman Sachs (NYSE:GS) continues to demonstrate financial resilience and potential for growth, as reflected in recent metrics and analyst sentiment. According to InvestingPro data, Goldman Sachs boasts a robust market capitalization of $147.77 billion and a favorable P/E ratio of 14.9, indicating that the stock may be attractively priced relative to its earnings.
The company's revenue growth for the last twelve months as of Q1 2024 stands at a healthy 4.6%, with a quarterly surge of 12.1% in Q1 2024, suggesting a strong financial performance.
InvestingPro Tips highlight Goldman Sachs' track record of raising its dividend for 12 consecutive years and maintaining dividend payments for 26 consecutive years, underscoring the bank's commitment to returning value to shareholders.
Furthermore, 15 analysts have revised their earnings upwards for the upcoming period, signaling confidence in the company's future profitability. These insights, combined with the fact that Goldman Sachs is trading near its 52-week high and has experienced a large price uptick over the last six months, paint a picture of a company with robust market standing and promising prospects.
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