Up 45% Since Late March, Is The Rally In Goldman Sachs’ Stock Over?

by Trefis Team
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Upside
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Goldman Sachs
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Goldman Sachs’ Stock (NYSE: GS) has gained 45% over recent weeks (vs. about 34% jump in the S&P 500) to its current level of $210 after falling to a low of $135 in late March as a rapid increase in the number Covid-19 cases outside China spooked investors. But the stock remains 14% below the $236 peak it reached in mid-February, and we believe it can recover to around $231 (10% upside potential) once fears surrounding the coronavirus outbreak subside. Our conclusion is based on our detailed analysis, ‘10% Gain Possible For Goldman Sachs Stock Post-COVID? In 2008 Crisis It Lost 59% And Then Gained 86.7%.’

How Did Goldman Sachs Stock Fare During The 2008 Downturn And What Does It Mean For The Stock This Time Around?

We see GS stock declined from levels of around $189 in October 2007 (the pre-crisis peak) to roughly $78 in March 2009 (as the markets bottomed out) – implying that the stock lost as much as 59% of its value from its approximate pre-crisis peak. This marked a sharper drop than the broader S&P, which fell by about 51%.

However, GS partially recovered post the 2008 crisis to about $146 in early 2010 – rising by 87% between March 2009 and January 2010. On the other hand, the S&P recovered by about 48% over the same period. In comparison, Goldman Sachs stock lost 43% of its value between the market peak on February 19 to the low on March 23 and has already recovered 45% since then. Keeping in mind the trajectory over 2009-10, this suggests a potential recovery to around $231 (10% upside) once economic conditions begin to show signs of improving. This marks an almost complete recovery to the $236-level GS stock was at before the coronavirus outbreak gained global momentum.

 

But When Can We Expect This Recovery In Goldman Sachs Stock?

The rally across industries over recent weeks can primarily be attributed to the Fed stimulus, which put investor concerns about the near-term survival of companies to rest. The gradual lifting of lockdowns globally has also helped the demand for some non-essential goods recover. Over the coming weeks, we expect continued improvement in demand and subdued growth in the number of new COVID-19 cases in the U.S. to buoy market expectations. While Q2 results will be weak, investors will focus their attention on results for 2021 – helping Goldman Sachs stock trend higher over the latter half of the year. Additionally, more information about Goldman Sachs’ revenue forecasts for 2020 and 2021 is available in our interactive dashboard.

While Goldman Sachs’ stock has limited upside, we found a lot of strength in JPMorgan’s stock. We compare the performance of JPMorgan vs. Wells Fargo to better understand the potential gains for the two banking giants.

 

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