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Wells Fargo believes more upside is in store for shares of Goldman Sachs . Banking analyst Mike Mayo upped his price target on the Wall Street investment bank to $420 from $390 a share, saying in a Tuesday note to clients that investors aren’t accounting for what should be a solid year of returns. GS YTD mountain Goldman shares since the start of the year “GS isn’t getting credit for expected ’23 and ’24 returns that are below target and could have greater upside if targets are achieved,” Mayo said, noting that a new analysis of return on tangible equity to price-to-tangible book positions Goldman Sachs as 19% undervalued relative to peers. Shares of Goldman Sachs have so far gained 9% in 2023. Mayo’s revised price target implies more than 12% upside from Tuesday’s close. Last month, the investment bank posted its largest earnings miss in a decade as revenues declined and expenses ticked up amid a challenging macro environment. Mayo views an upcoming investor day as an opportunity for management to extrapolate on certain targets, like 14% to 16% return on equity and 15% to 17% return on tangible equity. Headcount reductions earlier this year and a solid start to 2023 capital markets should offer some support. “Even if GS only achieves the 12.5% ROTE that we project in 2023, peer valuations would suggest that GS should trade at 1.4x tangible book instead of 1.2x, or roughly one-fifth higher than current levels,” Mayo said. — CNBC’s Michael Bloom contributed reporting
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