Goldman Sachs Group Inc (GS) — This is one of the world’s leading investment banking and securities firms. Favorable trends in the industry and disciplined expense management led the company to report third-quarter earnings of $4.57 per share, which was well ahead of consensus expectations of $3.21.
S&P Capital IQ expects growth to come from investment advisory services where the firm is an established market leader. Its analysts said Goldman Sachs is one of the best-positioned firms to benefit from an upturn in investment advisory services. They also believe Goldman will benefit from a strengthening U.S. economy and market share gains in Europe.
Its analysts estimate operating earnings per share (EPS) will increase 11% this year to $17.15 and 1% in 2015 to $17.25.
Credit Suisse Equity Research has an “outperform” rating on GS stock, noting its “best in class returns,” with an 11% year-to-date return on equity (ROE). However, the firm only has a fundamental target of $200.
Based on technical analysis, the price target is significantly higher. Many technicians, myself included, see GS stock as a major breakout candidate in a group that has generally underperformed throughout 2014.
On Dec. 5, Michael Ashbaugh noted that GS stock had “established a narrow five-week range.” Since then, shares have broken out from that range, targeting a significant move higher.
Three sessions ago, GS stock broke from a support zone at $188 to $193 on high supporting volume and a buy signal from MACD. The target, using both bars and point and figure analysis, is $220, 12% above current prices. Buyers should enter a stop-loss order at $186.