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Seaport Research Partners analysts are downgrading The Goldman Sachs Group Inc. (NYSE:GS) from “buy” to “neutral.”
Senior Analyst Jim Mitchell wrote in a Diversified Financials report that this downgrade is “primarily driven by valuation.”
The Goldman Sachs Group Inc.’s (GS) estimated EPS went from 3% during the second quarter to 1% for the year 2024 to also 1% for 2025.
“Previously, our ‘Buy’ was predicated on Goldman Sachs’ heavily discounted valuation, above average leverage to a capital markets recovery, and underappreciated benefits from simplifying its business model,” said Mitchell.
He explained that after a significant rally in the stock, its 11.7x P/E “now reflects a hefty premium to its 10-year/five-year averages of 10.0x/9.6x 2025E.”
The stock is up 41.15% from a year ago, and up 20.19% year-to-date.
Goldman (GS) is still one of the most leveraged among the large banks when it comes to investment baking, but Seaport — and consensus — estimates “do already reflect a healthy rebound.”