Citi’s Keith Horowitz believes Goldman’s (GS) settlement with the SEC is excellent news for GS shareholders since it was cheap and seems to preclude further regulatory action.
We believe the settlement indicates it is less likely another mortgage trading related complaint by the SEC against GS will be filed — It is our understanding that the SEC has completed its review of Goldman’s mortgage trading activities. Given GS and the SEC moved forward with a settlement on the Abacus transaction, we would be surprised to see new complaints brought forward on other transactions – although we cannot entirely rule out this possibility.
Reiterate Buy as settlement removes one major overhang on stock — While legal risks remain, we view this settlement as a positive outcome for GS. The resolution of the outstanding complaint eliminates one of the largest sources of uncertainty for the stock, which should bolster confidence and refocus investors on fundamentals, rather than hard-to-handicap legal outcomes.
His target for this ‘high risk’ rated stock? $200. Here’s GS right now:
Now see all the winners and losers from the Goldman settlement >
(Via Citi, Goldman Sachs, Keith Horowitz, 15 July 2010)