Bloomberg News reports that this morning, analysts at Oppenheimer, led by Chris Kotowski, upgraded Goldman Sachs to 'outperform' from 'perform' with a price target of $236 -- almost 30% more than the bank's current share value.
'We have been on the sidelines with respect to Goldman's stock mainly because we have had a bearish outlook on the trend in FICC trading', writes the analyst. 'However, the argument that Goldman cannot thrive in this environment—one that we have made ourselves—is increasingly sounding like the argument that bumble bees can't fly'.
The acronym 'FICC' refers to a bank's fixed income, currencies, and commodities trading division. A number of banks have scaled down their trading desks, a capital-intensive part of the business, in the wake of the financial crisis and new regulations that force these institutions to maintain larger capital cushions. As such, FICC revenue in the industry appears to be in structural decline.
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