Goldman Sachs: Increasing Our Fair Value Estimate to $460
We are increasing our fair value estimate for narrow-moat-rated Goldman Sachs to $460 from $417 per share. This is about 12 times forward earnings and 1.5 times tangible book value. Of the net $43 increase in our fair value estimate, about $9 is from earnings since our previous valuation update, $26 is from decreasing the cost of equity we use in our model to 9.5% from 10%, $13 is from increasing our forecast long-term operating margin by around 1 percentage point, and $3 is from other miscellaneous positive adjustments that were partially offset by an $8 decrease from changes in our required regulatory capital assumption.