Goldman Sachs Hits Fresh Highs After Analyst Upgrades

The Goldman Sachs Group, Inc. (GS) shares rose more than 2% during Thursday's session after two analysts upgraded the stock from Neutral to Buy. At the same time, easing tensions between the U.S. and Iran have helped the wider market – and particularly financial stocks – move higher.

Bank of America's Michael Carrier upgraded Goldman Sachs stock from Neutral to Buy with a price target of $270 per share, citing a favorable macroeconomic backdrop benefiting the near-term outlook and strategic repositioning that could create benefits over the long term. The analyst also sees an opportunity for an improving return on equity (ROE) for the brokerage firm.

Buckingham's James Mitchell upgraded the stock from Neutral to Buy with a price target of $290 per share, saying that brokerage stocks are less expensive with modest growth expectations compared to banking stocks. According to Mitchell, a rebound in capital markets activity could drive upward EPS revisions, creating an opportunity for rising earnings and valuation multiples.

From a technical standpoint, the stock broke out to fresh highs during Thursday's session, extending a run-up since the new year. The relative strength index (RSI) rose further into overbought territory with a reading of 75.16, but the moving average convergence divergence (MACD) experienced a bullish upswing. These indicators suggest that the stock could see some near-term consolidation, but the trend remains bullish.

Traders should watch for some consolidation above trendline support at $236.50 over the coming sessions. If the stock breaks down from those levels, traders could see a move toward the 50-day moving average at $223.88. The more likely scenario appears to be a rebound higher from these levels as the RSI moderates, where the stock could reach fresh highs.

The author holds no position in the stock(s) mentioned except through passively managed index funds.