Wall Street analysts downgraded Club holding Goldman Sachs this week. Jim Cramer says now is the perfect time to get into the stock. Keefe, Bruyette & Woods (KBW) cut shares to a hold-equivalent market perform rating from buy late Wednesday, citing Goldman Sachs’ elevated valuation and what the analysts see as a more balanced risk/reward. They pointed out that the stock trades at 2x tangible book value — above its historical valuation of 1.2x. “GS is at peak valuation with potential headwinds against strong market expectations owing to market uncertainty surrounding tariffs, inflation, interest rates and government policies,” the analysts, who also lowered their price target to $660 per share from $690, wrote. “These uncertainties have led to a disappointing start of the year in investment banking, driving a recent rotation away from capital market stocks.” During Thursday’s Morning Meeting , Jim described the KBW downgrade as “ridiculous” and said that new investors should buy the quality financial stock instead. Wall Street deal-making is about to pick up, which should boost revenue for Goldman’s crucial and industry-leading investment banking business. “We’re just about to have some deals. Are they out of their minds?” Jim asked, rhetorically. It’s widely believed that President Donald Trump ‘s approach to relaxing government regulations will lead to more mergers and acquisitions (M & A) and more companies going public — the advisory fees from which are the lifeblood of Wall Street investment banking operations. GS YTD mountain Goldman Sachs (GS) year-to-date performance It has, indeed, been a rough start of 2025 for M & A and initial public offerings (IPO) activity. But as Jim pointed out during the Club’s February Monthly Meeting last week, “No, we haven’t seen the flood of [those deals] yet but my sources at Goldman are pretty positive more than they should be unless their confidence is backed up by a brimming order book.” Jim worked at Goldman back in the day before he left Wall Street to become a financial journalist. An investment banking rebound was a key reason why we started buying Goldman Sachs in the first place late last year when shares were around $560 each. We have made three additional buys since. “There has been a meaningful shift in CEO confidence,” Goldman Sachs CEO David Solomon said last month shortly after reporting strong fourth-quarter earnings. “There is a significant backlog from sponsors and an overall increased appetite for deal-making supported by an improving regulatory backdrop.” We liked what we saw then and reiterated our buy-equivalent 1 rating and $650-per-share price target . It wasn’t all bad from KBW. The analysts did acknowledge some of these tailwinds in their research note. They cited catalysts including a “strong trading environment, improving IB backdrop, restructuring its consumer business and improving margins in Asset Management.” Goldman Sachs shares, which were modestly lower in Thursday afternoon trading to around $612 apiece, have advanced nearly 8% year to date. (Jim Cramer’s Charitable Trust is long GS. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
The Goldman Sachs company logo is displayed on a screen at the New York Stock Exchange during afternoon trading on Aug. 2, 2024.
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Wall Street analysts downgraded Club holding Goldman Sachs this week. Jim Cramer says now is the perfect time to get into the stock.
