FOR the first time since the throes of the pandemic, Goldman Sachs is worth more than its longtime Wall Street rival Morgan Stanley.
Goldman shares rose 2.6 per cent on Tuesday (Jul 30), boosting its market capitalisation to US$168.9 billion. That narrowly surpassed Morgan Stanley’s market value of US$168.6 billion after four years of lagging the competitor, according to data compiled by Bloomberg. It’s been a quick rise for David Solomon’s firm, as the gap between the two firms stood at more than US$20 billion at the beginning of the year.
Goldman’s “stock offers among the best risk/reward in our coverage universe given the potential for positive EPS revisions, and for secular re-rating”, BofA Global Research analyst Ebrahim Poonawala said, calling it his top pick.
Goldman shares have rallied 31 per cent this year to a fresh record high, bolstered by strong trading revenues and banking fees. Morgan Stanley’s shares are up only 11 per cent in 2024, lagging its biggest peers and the broader market as its wealth management business has underwhelmed.
“Robust markets bolstered Q2 revenue for the largest US banks, with the run-rate and banking-fee pipelines promising entering H2 – for Goldman Sachs and Morgan Stanley in particular,” Bloomberg Intelligence analyst Alison Williams said last week.
Analysts’ recommendations would indicate Goldman’s strength could continue, with their views of the stocks diverging in recent months. Goldman analysts turned the most bullish in more than a decade this year, according to data compiled by Bloomberg.
“We still see an attractive opportunity ahead if the firm continues to execute on its strategic plan as we anticipate,” JMP Securities analyst Devin Ryansaid after Goldman’s second-quarter earnings. BLOOMBERG
