UBS upgrades Goldman Sachs to buy from hold on attractive valuation, lower risk profile

By Steve Gelsi

Evercore gets upgraded by two notches to buy

Goldman Sachs Group Inc. (GS) on Wednesday drew an upgrade to buy from hold at UBS on the stock's attractive valuation and lower risk profile than its peers.

UBS also upgraded boutique investment bank Evercore Inc. (EVR) by two notches to buy from sell and adjusted price targets for Morgan Stanley (MS), as well as wealth-management specialists Charles Schwab Corp. (SCHW), Ameriprise Financial Inc. (AMP), LPL Financial Holdings Inc. (LPLA), Stifel Financial Corp. (SF) and Regions Financial Corp. (RF).

Analyst Brennan Hawken said Goldman Sachs "appears well positioned to outperform amidst elevated levels of market volatility" with potential growth in its asset- and wealth-management business and transactional banking.

Goldman Sachs offers less exposure to consumer deposits and commercial banking than other firms, analysts said.

The investment bank also enjoys an opportunity to accelerate its asset-management business through "attractively priced mergers and acquisitions," Hawken said.

UBS hiked Goldman's price target to $385 a share from $350 a share.

Shares of Goldman Sachs rose 0.8%.

Evercore stock rose 1.5% after UBS rated the bank a buy and lifted its price target to $135 a share from $112.

Hawken said Evercore "is executing better than expected" in the downtrodden business of mergers and acquisition advisory services.

While M&A completion volumes were down 50% in the first quarter, UBS is forecasting a less severe 20% drop in its M&A advisory business.

The figure indicates that Evercore's investment-banking relationships "are strong enough to generate over $500 million per quarter even though financing banks are in a better competitive position," Hawken said.

In terms of price-target adjustments, Evercore and Goldman were the only two out of 11 financial stocks covered by UBS to get increases instead of price cuts on Wednesday.

UBS reduced its price target for Morgan Stanley to $98 a share from $108 and reiterated a buy rating.

UBS also reiterated buy ratings on Schwab and Ameriprise and cut their price targets to $70 from $90 for the former and to $285 from $400 for the latter.

UBS reiterated a neutral rating on LPL Financial and cut its price target on the stock to $215 from $235.

Analysts also reiterated a neutral rating on Stifel Financial and cut their price target by $6 to $62. A neutral rating was reiterated for Regions Financial, while its price target was reduced to $100 from $130.

UBS reiterated a buy rating on Houlihan Lokey Inc. (HLI) and cut its price target to $105 from $115. It kept its neutral rating on Lazard Ltd. (LAZ) and reduced its price target to $32 from $40. It also reiterated a sell rating on Moelis & Co. (MC) and reduced its price target to $27 from $30.

Also read: Goldman Sachs, Morgan Stanley, BNY Mellon and State Street top Jefferies list for Q1 bank earnings

-Steve Gelsi

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04-13-23 0824ET

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